Quanta Computer Inc. Annual Report 2020

Quanta Computer Inc.

Annual Report 2020

◎ Spokesperson Name: Elton Yang Title: Senior VP & CFO, Finance Center Telephone: (03)327-2345 Email: [email protected]

◎ Deputy Spokesperson Name: Carol Hsu Title: Associate Director, IR Division, Finance Center Telephone: (03)327-2345 Email: [email protected]

◎ Company Address & Phone Number Address:

Headquarters:

No. 188, Wenhua 2nd Rd., Guishan Dist., Taoyuan City, Taiwan No. 211, Wenhua 2nd Rd., Guishan Dist., Taoyuan City, Taiwan

Manufacturing Site: No. 178, No. 188, No. 220, Wenhua 2nd Rd., Guishan Dist., Taoyuan City, Taiwan

Telephone: (03)327-2345 Taipei Office:

Telephone:

9F., No. 116, Hougang St., Shilin Dist., Taipei City, Taiwan (02)2882-1612

◎ Common Share Transfer Agent and Registrar: Name of Agent: Chinatrust Commercial Bank Address: 5F, No. 83, Sec. 1, Chongqing S. Rd., Zhongzheng Dist.,

Taipei City, Taiwan 10045 Website: https://ecorp.ctbcbank.com/cts/index.jsp Telephone: (02) 6636-5566

◎ Auditors For The Latest Financial Statements: Name of Auditors: Wan-Wan Lin, Liu-Feng Yang CPA Firm: KPMG Taiwan Address: 68F, No. 7, Sec. 5, Xinyi Rd., Xinyi Dist., Taipei City,

Taiwan 11049 Website: http://www.kpmg.com.tw Telephone: (02) 8101-6666

◎ Issuance of Global Depositary Receipts (GDRs) Place of Transaction: Luxembourg Stock Exchange (LuxSE) Website: https://www.bourse.lu/security/US74762X4079/70397

◎ Company’s Website: http://www.quantatw.com

https://ecorp.ctbcbank.com/

http://www.kpmg.com.tw/

https://www.bourse.lu/security/US74762X4079/70397

http://www.quantatw.com/

Contents

I. Report to Shareholders........................................................................................................1

II. Company Profile ..................................................................................................................4

1. Date of Incorporation .....................................................................................................4 2. Key Milestone ................................................................................................................4

III. Corporate Governance ........................................................................................................7

1. Organization Structure ...................................................................................................7 2. Directors and Management Team ................................................................................10 3. Implementation of Corporate Governance ...................................................................27 4. Information of CPA Audit Fee ......................................................................................78 5. Information on Change of CPA .....................................................................................78 6. Chairman, President and/or Management Team in Charge of Finance or Accounting

Who Has Served at CPA Firm(s) or Affiliate(s) In The Previous Year ..............................79 7. Net Change in Shareholding or Shares Pledged by Directors, Management Team, and

Shareholders with 10% Shareholdings or More ...........................................................79 8. Related Party Relationships Among Top Ten Shareholders ...........................................81 9. Ownership of Shares in Affiliated Enterprises ...............................................................82

IV. Fund Raising ......................................................................................................................83

1. Capitals and Shares ......................................................................................................83 2. Issuance of Corporate Bonds ........................................................................................91 3. Issuance of Preferred Shares ........................................................................................91 4. Issuance of Global Depositary Receipts (GDRs).............................................................92 5. Employee Stock Options...............................................................................................93 6. Employee Restricted Stock ..........................................................................................93 7. New Share Issuance in Connection with Mergers, Acquisitions, and Transfer of

Shares ..........................................................................................................................93 8. Financing Plans and Implementations ..........................................................................93

V. Business Activities .............................................................................................................94

1. Business Scope .............................................................................................................94 2. Overview of Market and Sales .................................................................................... 105 3. Employee Status ........................................................................................................ 117 4. Environmental Protection Expenditure ...................................................................... 118 5. Labor Relations .......................................................................................................... 119 6. Material Contracts ..................................................................................................... 121

VI. Financial Information....................................................................................................... 122

1. Five-Year Financial Summary ...................................................................................... 122 2. Five-Year Financial Analysis ........................................................................................ 126 3. Audit Committee’s Review Report ............................................................................. 129 4. Consolidated Financial Statements ............................................................................. 129 5. Individual Financial Statements .................................................................................. 129 6. Financial Difficulties ................................................................................................... 129

VII. Review of Financial Position, Analysis of Financial Performance and

Risk Management ............................................................................................................ 130

1. Analysis of Financial Status......................................................................................... 130 2. Analysis of Operation Results ..................................................................................... 131 3. Analysis of Cash Flow ................................................................................................. 132 4. Major Capital Expenditure Items and Impact on Financial and Business .................... 133 5. Re-Investment Policies ............................................................................................... 133 6. Analysis of Risk Management ..................................................................................... 134 7. Other Material Information ........................................................................................ 146

VIII. Special Disclosure ............................................................................................................ 147

1. Summary of Affiliated Companies .............................................................................. 147 2. Private Placement Securities ...................................................................................... 166 3. Status of Shares Acquired or Disposed by Subsidiaries ............................................... 166 4. Other Required Supplementary Notes ....................................................................... 166 5. Events with Material Impacts on Equity or Stock Price ............................................... 166

- 1 -

I. Report to Shareholders

In FY2020, the global health care and economic systems faced serious challenges from the impact of COVID-19. Various quarantine measures undertaken by each country to suppress the pandemic have led to significant changes in people's daily consumption and economic activities, thus reshaping new life style and business patterns. Furthermore, global spread of the pandemic, significant fluctuations in crude oil prices and exchange rates, as well as geopolitical conflicts along with other uncertainties, all posed challenges and test the resilience of business operations.

In the past year, Quanta experienced disrupted production due to the delayed start of production post the Lunar New Year holidays. Upon the resumption of production, we immediately faced the challenges of labor supply and materials supply constraint, coupled with global logistics disruption on raw materials and finished goods due to the pandemic. However, we exercised our flexibility and strong teamwork capabilities to quickly respond to changes and to seek solutions in an environment full of uncertainties. Thanks to the unremitting efforts of all employees, we managed to turn the tide and successfully turned crisis into opportunities. As a result, we delivered the best full year operating performance since our listing in 1999. Quanta's efforts in lean management was recognized by the Fortune magazine as one of the "World's Most Admired Companies 2021". We were also recognized as one of the “Derwent Top 100 Global Innovators” for three consecutive years since 2019 for our achievements in innovation.

Quanta’s performance in FY2020 and outlook for FY2021 are as follows:

I. Abstract of Quanta’s performance in FY2020

FY2020 was a year of bountiful harvest for Quanta. We benefited from the robust demand for notebook computers and servers driven by WFH (Work-From-Home) business opportunities, coupled with team efforts of all employees to overcome various challenges on material supply constraint, logistics and capacity bottlenecks. As a result, Quanta not only sustained the outstanding performance of gross profit margin, operating profit margin and net profit margin delivered in FY2019, but we also set new record of total NB shipment, gross profit, operating profit, net income before tax and net income after tax in FY2020.

Consolidated revenue in FY2020 reached NT$1.09TN, up 5.95% from the previous year. Gross profit margin of 5.86% and operating profit margin of 2.97%, both were better than the previous year of 4.78% and 1.84% respectively. Net income after tax in FY2020 and FY2019 were $25.39BN and $16.32BN respectively, representing an annual growth rate of 55.63%. Net income attributable to owners of parent in FY2020 and FY2019 were $25.33BN and $15.94BN respectively; EPS in FY2020 was $6.57, setting new record since the listing. The Board of Directors has resolved cash dividend distribution of NT$5.20 per share, representing dividend payout ratio of 79.15%. Non-operating income in FY2020 was NT$1.98BN.

From the perspective of operational integration and optimization, Quanta has always been proactive in meeting customers’ needs and strive to get it right and do it well the first time from every aspect of design, manufacturing, scheduling, cost and quality; doing so would allow Quanta to create a win-win situation for both parties. Through diversifying our production sites and improving regional production flexibility, we were able to effectively resolve the risk of over-concentrated production and reduce the potential risks on disrupting business operations associated with political tensions between the U.S. and China. Aside from local manufacturing capacity expansion in the Hwa-Ya Technology Park in Taiwan, including the expansion of QC1, establishment of production capacity in QC2, QAT (Dong Yuan Plant), as well as new

- 2 -

construction of the Third Production Plant (QC3). The newly established production plant in Thailand also continues to expand at a steady pace and demonstrates production efficiency. Furthermore, the Company continues to optimize our existing production sites and service centers in Asia, America, and Europe to successfully establish R&D and manufacturing site that is centered around Taiwan. Quanta remains flexible in responding to the dynamic needs of our customers and the market by timely provide the best manufacturing services and solutions.

Furthermore, in the beginning of 2020 when there was still a lot of uncertainties around the pandemic, Quanta quickly planned ahead and established company-wide risk management awareness, rapidly formulated epidemic risk management plans and organized an epidemic risk management task force to drive epidemic prevention procedures and response. We further accelerated the procurement and dispatch of resources critical to epidemic prevention, established emergency response management and control procedures, as well as standard operating procedures in response to the evolving developments of the pandemic. The fast response to form epidemic risk management task force would ensure the sustainability of the company's operations and minimize possible impacts from the pandemic.

II. Operational outlook for FY2021

The demand derived from epidemic prevention measures continues to boost business opportunities related to WFH, remote learning, online consumption and entertainment. While the new wave of "home economy" remains an ascendant trend, new economic models are also emerging as new business opportunities. The growing maturity of broadband and cloud infrastructure deployment further accelerated the development of innovative applications in smart medical services and autonomous drive. These drivers are expected to support the steady growth of Quanta's cloud computing business and further benefit the end demand for notebook computers that offer productivity.

In terms of manufacturing, we are fully implementing the well-established strategy of Quanta Smart Factory, pushing for "Rationalization, Automation, Intelligence, and Datafication" and embracing the application of Artificial Intelligence (AI) to elevate quality and yield rate. Furthermore, we would evaluate and adjust the most appropriate production solutions based on customers’ needs. From the perspective of factory management, we are committed to advancing manufacturing techniques, elevating the pace of automation and smart manufacturing. We continue to innovate, change, refine and surpass, in order to enhance Quanta's core competitiveness and to strive for excellence in quality control, production management, cost budgeting, and man power management.

Looking into FY2021, the development trend of diversified end devices is becoming more and more apparent, while cross-industry collaboration is also growing in popularity. The development of AI technology has also reshaped the direction of "centralized cloud computing" towards "decentralized edge computing". The new era with a wide variety of connected Artificial Intelligence of Things (AIoT) devices combined with the new generation of mobile communication technology will give birth to an ultra-smart and connected society in the near future. Quanta will continue to hold our humble attitude to draw insight from technology and innovation trends, to learn and to apply new knowledge and methods, through continuously innovation we can face different technology integration and challenges.

The existence of AI in the future is not limited to the cloud, but would also extend to edge computing and end devices. By combining AI with technologies in multimedia, Internet of Everything, and hyper connectivity. The infinite possibilities of innovative applications and

- 3 -

solutions in AI can be realized through high-speed computing analysis utilizing supercomputers, integration of big data and storage resources. This in turn would create new economic and business models in various applications and industries. Quanta's growth plan for the next decade is to focus on "Super Computing" and "Hyper Connectivity". We will proactively invest and develop new technologies, techniques, tools and methods with hopes to open the next chapter of our success in the world of ultra-high-speed connectivity empowered by 5G technology.

Regardless of the boom and bust cycle of the economy and the constant evolving trends of technology, as long as we do not lose heart and remain persistent in our diligence, we can leverage our keen and foresighted observations, execution excellence, and meticulous risk management to refine and to optimize technology and management. We shall uphold the Quanta spirit of craftsmanship - "Innovation & Entrepreneurship", "Excellence & Improvement", and "Mission & Achievement". We trust we will be able to break new ground in the midst of tidal changes and seize opportunities in the new generation of cloud computing, super-intelligent computing, and ultra-high-speed communication.

Chairman: Barry Lam Vice Chairman & President: C.C. Leung Chief Financial Officer: Elton Yang

- 4 -

II. Company Profile 1. Date of Incorporation: May 9, 1988. 2. Key Milestone

Year Key Milestone

1988 Quanta Computer was established in Shilin District, Taipei City with paid-in capital of NT$30M

1989 Manufacturing site relocated to Linko district in Taoyuan City

Annual sales exceeded NT$800M

1990 Ranked #145 in annual trade performance and received "Award for International Trade" from Bureau of Foreign Trade, Ministry of Economic Affairs

1992 Ranked #55 in annual trade performance and received "Award for International Trade" from Bureau of Foreign Trade, Ministry of Economic Affairs

Ranked #60 in Top 500 Private Manufacturing Corporations by China Credit Information Service, Ltd.

1993 Ranked #90 in "Top 1,000 Manufacturing Enterprises" by CommonWealth Magazine

1994 Awarded with "First Class Award for Well-Performing Exporting Firm" by Bureau of Foreign Trade, Ministry of Economic Affairs

Certified with ISO 9002

1995 Certified with ISO 9001

1996 Annual notebook shipment marked record high and ranked No. 1 notebook computer manufacturer in Taiwan for the first time

1997 Groundbreaking ceremony for headquarters and factory buildings (QC1) in Hwaya Technology Park in Linko district

1998 Ranked #3 in "The Information Technology 100 -- Who Is the Most Profitable" by American Business Week

Annual notebook computer shipment exceeded 1M units for the first time

1999 Quanta Computer Inc. listed in Taiwan Stock Exchange (TWSE)

Inauguration for QC1

2000 Inauguration for R&D Center

Established manufacturing site in Shanghai

2001 Chairman, Mr. Barry Lam, was awarded with "The World's Top 25 Most Outstanding Managers" by Business Week

Became No. 1 notebook computer manufacturer in the world

Ranked first place in import/export volume and awarded with "Golden Trading Award" by Bureau of Foreign Trade, Ministry of Economic Affairs

2002 Affiliated Company, Quanta Storage Inc., listed in OTC

Chairman, Mr. Barry Lam, was awarded with "Wen Hsin Special Award" by Council for Cultural Affairs, Executive Yuen

Selected by Global Finance as "BEST CCOMPANIES in Asia" in Computer Hardware Category

2003 Chairman, Mr. Barry Lam, was awarded with "Second Class Bright Star Medal" by the Presidential Office of Taiwan

Received "MOE Industrial Technology Development Award – Excellent Achievement Award"

Inauguration for QRDC (Quanta Research & Development Complex)

- 5 -

2004 Ranked #5 in "Top Ten Fastest Growing Company" by China Credit Information Service, Ltd.

2005 Company’s registration address changed to No. 188, Wenhua 2nd Rd., Guishan Dist., Taoyuan City

Inauguration for Quanta Research Institute (QRI)

2006 Announced strategic alliance with RoyalTek to complete Company's vertical integration in GPS technology and manufacturing capabilities

Ranked #454 in the "Global Fortune 500 Enterprises" by Fortune Magazine

2007 Certified as CMMI Level 2 manufacturer for mobile phone devices

Ranked #15 in the "2007 Most Admired Company" by Fortune Magazine

Both the Company and Chairman, Mr. Barry Lam, received honorary doctorate and outstanding alumni awards from the National Taiwan University

2008 Set up manufacturing site for Hwaya Medical Device Manufacturing Site

Awarded with "Excellence in Corporate Social Responsibility" by Common Wealth Magazine

2009 Inauguration for Quanta Arts and Performance Center

Recognized as first place in "The Most Admired Company in Notebook Industry" and top 10 of the "Most Admired Company Survey" by CommonWealth Magazine

Chairman, Mr. Barry Lam, was recognized as the "Most Admired Entrepreneurs" by CommonWealth Magazine

Revealed the "New 3C" concept--Cloud Computing, Connectivity, and Client Device, as the vision of the Company to achieve the goal of cloud computing development

2010 Nominated for the “World’s 500 Most Influential Brands” by World Brand Lab

Quanta Computer, Chairman, and Quanta Culture & Education Foundation received Gold Medal of the "10th Arts & Business Awards" from the Council for Cultural Affairs, Executive Yuen

Awarded with "Industrial Technology Advancement Award" by the Ministry of Economic Affairs

Ranked #12 in the "World Most Admired Company" by Fortune Magazine

Built up the third manufacturing site in Chongqing, China

2011 Ranked #1 in the “2011 Most Admired Company in Taiwan” in Computer Industry category by CommonWealth Magazine

Ranked #1 in Taiwan and #80 in overall ranking of the “Asia’s 500 Most Influential Brands"

Ranked #602 in the “Forbes Global 2,000”

2012 Chairman, Mr. Barry Lam, received honorary doctorate at the College of Engineering from the National Tsing Hua University

Recognized as the “Asia’s Fab 50” by Forbes Magazine

Chairman, Mr. Barry Lam, received the “Pan Wen Yuan” prize

2013 Chairman, Mr. Barry Lam, received the honorary title of “2013 ITRI Laureate” awarded by the Industrial Technology Research Institute (ITRI)

Received "A" ranking by the Security and Future Institute on the "10th Information Transparency and Disclosure Rankings"

- 6 -

Ranked #10 and was also the only enterprise in Asia Pacific to receive the "2013 ASTD BEST Awards for Excellence in Workplace Learning and Performance" from the Association for Talent Development (ASTD)

Ranked #13 in "Top 50 Enterprises of Excellence in Corporate Social Responsibility" by CommonWealth Magazine

2014 Received “The 9th National HRD InnoPrize” by the Ministry of Labor

2015 Chairman, Mr. Barry Lam, received "Order of Propitious Clouds with Grand Cordon" from The Office Of The President

President, Mr. C.C. Leung, received honorary doctorate from the National Chiao Tung University

Received "2015 National Talent Development Awards" for Large Enterprise and Outstanding Individual in Practice Award by the Ministry of Labor

Received Gold Medal of the “Best Employment Award” by Taoyuan City Government

Entitled to receive "Badge of Accredited Healthy Workplace" by the Ministry of Health and Welfare

2017 Subsidiary, QCT, won “The Most Innovative Cloud Based Project – Cloud Computing Development Program” award from The Asset Magazine

2018 Ranked #354 in the “Fortune Global 500” by Fortune Magazine

Awarded with "2017 Industry Excellent Production and Output" by National-Level Shanghai Songjiang Economic & Technological Development Zone

Awarded with "2017 Lead Investing Company" by National-Level Shanghai Songjiang Economic & Technological Development Zone

Awarded with “2017 Best Chinese Suppliers in Response to Climate Change” by China CDP Global Environment Information Research Center

2019 Chairman, Mr. Barry Lam, was awarded with “1st Class Science and Technology Profession Medal” from the Ministry of Science and Technology

Nominated for "Derwent Top 100 Global Innovators 2018-2019" by Clarivate Analytics for the first time

Ranked #5 in the “Top 100 Foreign Invested Companies In Employee Recruitment In Shanghai City” by Shanghai Association of Foreign Investment

2020 Nominated for "Derwent Top 100 Global Innovators 2020" by Clarivate Analytics

Awarded with "2019 Industry Excellent Production and Output" by National-Level Shanghai Songjiang Economic & Technological Development Zone

Nominated for “2019 Top 500 Excellent Exporters/Importers” by the Bureau of Foreign Trade, MOEA

2021 Ranked #5 in the “Top 5000 Largest Corporations in Taiwan” by China Credit Information Service Ltd. (CRIF)

Awarded with “Top 100 Corporations in Taiwan For 20 Consecutive Years – Blooming 20 Award” by China Credit Information Service Ltd. (CRIF)

Awarded with “The 2020 International Trade Awards – The Top Trade Contributor Awards (IT Category)” by the Bureau of Foreign Trade, MOEA

Nominated for the “2021 World’s Most Admired Companies” by Fortune Magazine, one of the only three companies in Taiwan being nominated.

Awarded with "Derwent Top 100 Global Innovators" for three consecutive years by Clarivate Analytics

- 7 -

III. Corporate Governance

1. Organization Structure (1) Organization Structure

- 8 -

(2) Major Corporate Functions

Department Major Functions

President’s Office

‧Implementation and execution of the Company’s overall organizational business, sales and production, as well as operational targets.

Audit Committee

‧Supervise the fair presentation of the Company’s financial statements; the selection/dismissal, independency, and performance of CPAs; the effective implementation of internal control; legal compliance; and the control of existing or underlying risks.

Remuneration Committee

‧Establish and periodically review the policy, system, standard, and structure of performance evaluation and the remuneration for Directors and management team.

‧Periodically access and determine the remuneration for Directors and management team.

Audit Team ‧Audit and evaluate internal control system and provide recommendation based on analysis and assessment.

‧Facilitate effective control with a reasonable cost and assess quality improvement.

BGM Business Unit

‧Supervise the operations of related products and businesses in specific market segmentation.

BGD Business Unit

BGC Business Unit

BGS Business Unit

‧Design and manufacture of mechanical modules.

ID Design Center

‧Product industrial design.

Product Design Center (PDC)

‧Product technical support.

Manufacturing Site

‧Administer various management affairs of Company’s manufacturing sites.

‧Supervise the implementation of logistic management to ensure smooth operation of production plans.

‧Supervise the manufacturing sites to optimize overall efficiency of production units.

General Administration

Office

‧Manage external public affairs, cooperate image, media relations and organization of PR and marketing activities.

‧Collect and analyze various data on production plan and financial analysis as a reference for business operation.

‧Planning and implementation of construction affairs. ‧Administer legal affairs. ‧Planning and operation of financial and accounting affairs,

including fund management, account management and tax affairs.

- 9 -

Department Major Functions

‧Planning and implementation of human resources management systems.

‧Integration and planning of management information systems. ‧Maintenance of hardware equipment on promise to provide

employees with a safe work environment. Quality

Assurance Center

‧Execute QA objectives, administer the operation of quality assurance system and management of quality control and customer services.

Procurement Center

‧Procure high-quality and low-cost materials that satisfy market needs.

Overseas Business Unit

‧Overseas business establishment and expansion.

Quanta Research

Institute (QRI)

‧Plan the direction for new product development. ‧Provide necessary support for introducing new products to the

market.

- 10 -

2. Directors and Management Team (1) Directors and Supervisors

I. Profiles of Directors Date: April 20, 2021 Unit: Shares

Note 1: Those without nationality indication are citizens of the Republic of China (R.O.C.) Note 2: Other entitlements of shares are excluded. Note 3: QCI has established Audit Committee, therefore the three independent Directors are ex officio members to exercise the powers of supervisors. Note 4: The Chairman and the President, or person of an equivalent post (the highest level manager) of the Company are not the same person, spouses, or relatives within

the first degree of kinship. Note 5: Direction, Tim Li, resigned in January 2021, thus there’s one vacancy in director seat. Re-election upon maturity of current tenure.

Title

Nationality

(note 1) / Gender

Name Date

Elected Term

(Years)

Date First

Elected

Shareholding when Elected

Current Shareholding Spouse & Minor

Shareholding

Shareholding by Nominee

Arrangement

Experience（Educ

ation）note 6

Other Position

(note 6)

Executives, Directors or Supervisors who

are spouses or within two degrees of

kinship

Shares ％ Shares ％ Shares ％ Shares ％ Title Name Relation

(note 4)

Chairman -/Male Barry Lam 06/21/

2019 3

years 05/05 /1988

415,738,138 10.76%

415,738,138

10.76%

11,157,506

(note 2) 0.29%

4,400,000

0.11%

- - -

NA -

Vice Chairman

-/Male C. C.

Leung 06/21/ 2019

3 years

05/05 /1988

82,645,736

2.14%

82,645,736

2.14%

0

- 0

- - - - NA -

Director -/Male

C. T. Huang

06/21/ 2019

3 years

06/13 /2008

5,163,197 (note 2)

0.13%

5,163,197 (note 2)

0.13%

4,236,311 (note 2)

0.11%

0

- - - - NA -

Independent

Director -/Male

Dr. Wei-Ta Pan

06/21/ 2019

3 years

06/20 /2001

0 (note 2)

- 0 (note 2)

- 0

- 0

- - - - NA -

Independent

Director -/Male

Dr. Pisin Chen

06/21/ 2019

3 years

06/24 /2016

18,000 - 18,000 - 0 - 0 - - - - NA -

Independent

Director -/Male

Hung Ching Lee

06/21/ 2019

3 years

06/21 /2019

0 - 0 - 0 - 0 - - - - NA -

- 11 -

Note 6: Major experiences and con-current job posts of Directors:

Title Name Education/Experiences Con-Current Job Posts

Chairman Barry Lam ‧Master Degree in Electrical Engineering, Honorary Doctorate, and Outstanding Alumni at the National Taiwan University

‧Honorary Doctorate at the National Tsing Hua University, Taipei Medical University, National Chiao Tung University, City University of Hong Kong, and The Hong Kong Polytechnic University.

‧President of Kinpo Electronics

‧ Chairman of: QVCL, QCTI, Quanta Cloud Technology Inc., AIC, QCA, QCH, Chien Yue Investment Co., Ltd., Quanta Culture & Education Foundation, Quanta Arts Foundation, and Quanta AI Medical Foundation.

‧ Managing Director at SINOCON ‧ Director of:

PK Venture Capital Corp., Maxima Capital Management, WK Technology Fund VI, WK Technology Fund VII, QIL, QAL, QCML, QMI, QSI-USA, QCT Inc., and Lung Yingtai Cultural Foundation.

‧ Board of Director at CNAIC ‧ Board of Director & Vice President of the Institute for

Biotechnology and Medicine Industry (IBMI)

Vice Chairman C. C. Leung ‧Honorary Doctorate at the National Chiao Tung University

‧Bachelor Degree in Physics at the National Taiwan University

‧Vice President of Kinpo Electronics ‧Vice President of Compal Computer

‧ President of Quanta Computer Inc. ‧ Chairman of:

QMIT, QMI, QSI-USA, QMN, QSN, QCN, QCHN, ‧ Director of:

Quanta Cloud Technology Inc., RTK, AIC, QCA, QCML, QCJ, QCG, QCTG, QMB, QCTS, QDL, QIT, Q_Bus, Tech Chain Ltd., Exmore, QDL(HK), Tech Chain(HK), Exmore(HK)

‧ Director & President of QCH

Director C. T. Huang ‧Bachelor Degree in Electrical Engineering at the Chung Yuan Christian University

‧Factory Director of Kinpo Electronics

‧ EVP of Quanta Computer Inc. ‧ Chairman of :

TFC, TCC, TWW, TLC, TGC, TTC, TNC, TFQ, TWQ, ZYES, YDCQ, TCQ, QSS, QCT (Beijing) Co., Ltd

‧ Director of QMB & QSI

Independent Director Dr. Wei-Ta Pan ‧Nebraska Law School, J.D. ‧Tulane Law School, L.L.M. ‧President, Chairman at Department of Law,

School of Law at Soochow University ‧Arbitrator of The Arbitration Association of The

Republic of China ‧ Independent Director, Audit Committee

Member, Remuneration Committee Member of China Life Insurance Co. Ltd.

‧ President of Soochow University and Professor at School of Law, Soochow University

‧ Chairman of the Private School Promotion Foundation ‧ Director of the Modern Women’s Foundation ‧ Independent Director & Audit Committee Member of Radium Life

Tech. Co., Ltd. ‧ Independent Director, Audit Committee Member, Remuneration

Committee Member of SinoPac Holdings ‧ Member and Chair of the Audit Committee and Remuneration

Committee at Quanta Computer Inc.

- 12 -

Independent Director Dr. Pisin Chen ‧Doctoral Degree in Theoretical Particle Physics at the University of California, Los Angeles (UCLA)

‧Professor of Physics at the National Taiwan University

‧ Distinguished Chair Professor for Research at the Department of Physics at the National Taiwan University

‧ Director and Chair Professor at the Leung Center for Cosmology and Particle Astrophysics, National Taiwan University

‧ Lifetime Analyst at the Kavli Institute for Particle Astrophysics and Cosmology (KIPAC), Stanford University

‧ Member of the Audit Committee at Quanta Computer Inc.

Independent Director Hung Ching Lee ‧Master Degree in Finance and Law at the Chung Yuan Christian University

‧Bachelor Degree in Accounting at the Chung Yuan Christian University

‧Vice President of TCB Bank Securities Corp. ‧Senior Vice President at Capital Securities Corp. ‧Assistant Manager at the Taiwan Stock

Exchange Corp. ‧Independent Director, Member and Chair of the

Audit Committee and Remuneration Committee at Chuwa Wool Industry Co., Ltd. (1439)

‧ Member of the Audit Committee and Remuneration Committee at Quanta Computer Inc.

‧ Independent Director, Audit Committee Member, and Remuneration Committee Member of Roo Hsing Co., Ltd.

- 13 -

II. Major Shareholders of Institutional Shareholders: NA. III. Professional Qualifications and Independence Analysis of Directors and Supervisors:

Criteria

Name

Meet One of the Following Professional Qualification Requirements, Together With at Least Five Years Work Experience

Independence Criteria*

Nu

mb

er o

f O

ther

Pu

blic

Co

mp

anie

s in

Wh

ich

th

e In

div

idu

al is

C

on

curr

entl

y Se

rvin

g as

an

Ind

epen

den

t D

irec

tor

An Instructor or Higher Position in a Department

of Commerce, Law, Finance, Accounting or

Other Academic Department Related to

the Business Needs of the Company in a Public or Private Junior College, College or University

A Judge, Public Prosecutor, Attorney, Certified Public

Accountant, or Other Professional or Technical

Specialists Who Has Passed a National Examination and Been

Awarded a Certificate in a Profession Necessary for the

Business of the Company

Have Work Experience in

Commerce, Law, Finance,

Accounting or Otherwise

Necessary for the Business of the

Company

1 2 3 4 5 6 7 8 9 10 11 12

Barry Lam ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 0 C. C. Leung ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 0

C. T. Huang ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 0

Dr. Wei-Ta Pan ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 2

Dr. Pisin Chen ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 0

Hung Ching Lee ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 1

* Please tick the corresponding boxes that apply to the Directors during the two years prior to being elected or during the term of office: 1. Not an employee of the company or its affiliates. 2. Not a Director or supervisor of the company or any of its affiliates. Not applicable in case where the person is an independent Director of the Company, its

parent company, a subsidiary, or any subsidiary under the same parent company, as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary.

3. Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in shareholding.

4. Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship of a managerial officer under subparagraph 1 or any of the persons in the preceding two subparagraphs.

5. Not a Director, supervisor, or employee of a corporate shareholder that directly holds five percent or more of the total number of issued shares of the Company, or that ranks among the top five in shareholdings, or that designates its representative to serve as a Director or supervisor of the Company under Article 27, paragraph 1 or 2 of the Company Act. Not applicable to independent Directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.

6. Not a Director, supervisor, or employee of a corporate shareholder that the majority of the company's Director seats or voting shares are controlled by the same person. Not applicable to independent Directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.

7. Not a Director (or governor), supervisor, or employee of another company or institution that the chairperson, general manager, or person holding an equivalent position of the company are the same person or are spouses. Not applicable to independent Directors appointed in accordance with the Act or

- 14 -

the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.

8. Not a Director, supervisor, officer, or shareholder holding five percent or more of the shares, of a specified company or institution that has a financial or business relationship with the Company. Not applicable to independent Directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent, if the specified company or institution holds 20 percent or more and no more than 50 percent of the total number of issued shares of the public company.

9. Not a professional individual who, or an owner, partner, Director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides auditing services to the Company or any affiliate of the Company, or that provides commercial, legal, financial, accounting or related services to the Company or any affiliate of the Company for which the provider in the past 2 years has received cumulative compensation exceeding NT$500,000, or a spouse thereof; provided, this restriction does not apply to a member of the remuneration committee, public tender offer review committee, or special committee for merger/consolidation and acquisition, who exercises powers pursuant to the Act or to the Business Mergers and Acquisitions Act or related laws or regulations.

10. Not having a marital relationship, or a relative within the second degree of kinship to any other Director of the Company. 11. Not been a person of any conditions defined in Article 30 of the Company Act. 12. Not a governmental, juridical person or its representative as defined in Article 27 of the Company Act.

(2) Profiles of Key Management Team: Date: April 20, 2021 Unit: Shares

Title Nationality

(Note 1)/ Gender

Name Date

Effective

Shareholding Spouse & Minor

Shareholding


Arrangement

Experience（Education

）Note 4

Other Position (Note 4)

Managers who are Spouses or Within Two Degrees of Kinship

Shares ％ Shares ％ Shares ％ Title Name Relation (note 3)

President -/Male C.C.

Leung 1998.04 82,645,736 2.14% - - - - - - - NA -

EVP -/Male C.T.

Huang 1998.04 5,163,197

(Note 2)

0.13%

4,236,311 (Note 2)

0.11%

-

-

-

-

-

NA -

EVP -/Male Alan Tsai 2002.01 32,271 - - - - - - - - NA -

SVP -/Male C.S.

Yang 1996.07 217,600 - 203,559 - - - - - - NA -

SVP -/Male Mike Yang

2002.07 51,345 - - - - - - - - NA -

SVP -/Male Alan Chai

2004.05 50,000 - - - - - - - - NA -

SVP (CFO)

-/Male Elton Yang

2006.11 16,504 - - - - - - - - NA -

- 15 -

VP -/Male Steve Cheng

2003.01 20,543 - 4,425 - - - - - - NA -

VP -/Female Michelle

Hsieh 2002.07 24,000 - - - - - - - - NA -

VP -/Male Brand Chang

2002.07 151,015 - - - - - - - - NA -

VP -/Male J.J. Wei 2006.05 163,392 - - - - - - - - NA -

VP -/Male Danny

Lin 2001.05 1,997,000 - 812,162 - - - - - - NA -

VP -/Female Terrisa Chung

2005.05 66,400 - - - - - - - - NA -

VP -/Male Ted

Chang 2009.01 185 - - - - - - - - NA -

VP -/Male Thomas

Tsou 2009.08 1,000 - 133 - - - - - - NA -

VP -/Male James

Jau 2010.03 - - 3000 - - - - - - NA -

VP -/Male Roger Huang

2000.08 4,759,596 - 136,112 - - - - - - NA -

VP -/Male W.L. Sung

2010.07 1,185,693 - - - - - - - - NA -

VP -/Male J.C.

Tzeng 2011.01 173,672 - - - - - - - - NA -

VP -/Male Bruce

Wu 2012.06 60,551 - 1,332 - - - - - - NA -

VP -/Male Jonny Hsu

2012.12 660 - - - - - - - - NA -

VP -/Male Peter Hsieh

2016.03 400 - 3,000 - - - - - - NA -

VP -/Male Michael

Wu 2019.03 - - 200,000 - - - - - - NA -

VP -/Male Frank

Chuang 2019.04 20,000 - - - - - - - - NA -

VP -/Male Robin Chou

2019.04 - - - - - - - - - NA -

VP -/Male Vincent

Yuan 2020.01 - - - - - - - - - NA -

- 16 -

Note 1: Those without nationality indication are citizens of the Republic of China (R.O.C.) Note 2: Other entitlements of shares are excluded. Note 3: The Chairman and the Vice Chairman, or the general manager or person of an equivalent post (the highest level manager) of the Company are not the same person,

spouses, or relatives within the first degree of kinship. Note 4: Major experiences and con-current job posts of key management team:

Title Name Education/Experiences Con-Current Job Posts

President C.C. Leung Please refer to details disclosed for Directors Please refer to details disclosed for Directors

EVP C.T. Huang Please refer to details disclosed for Directors Please refer to details disclosed for Directors

EVP Alan Tsai

‧ Master of Science from the Institute of Computer Science and Decision at the National Tsing Hua University

‧ Bachelor of Science from the Department of Computer Engineering at the National Chiao Tung University

‧ SVP & Group GM, Business Group of Mobile Computing, First International Computer Inc.

‧ Director of QSI

SVP C.S. Yang ‧ Bachelor of Science in Industrial Management at the National Cheng Kung

University ‧ Director of Procurement at Wang Computer Inc.

‧ Chairman & President of KSH ‧ Chairman of SJDT & KCC ‧ Director of FDDT & DGT

SVP Alan Chai

‧ MBA & BS of EE at Chung Yuan Christian University ‧ VP General Photonics Inc, Chino, USA ‧ President, ADI System Inc, San Jose, USA ‧ Managing Director, ADI System (UK) Limited, UK. ‧ AVP, ADI Corp, Taipei

NA

SVP Mike Yang

‧ Master of Science in Electrical Engineering at Arizona State University

‧ Assistant VP of Procurement at A.D.I. Corporation

‧ Director & President of Quanta Cloud Technology Inc. ‧ Managing Director of QCG, QCTG ‧ Director of QCTJ, QCTK, QCTS, QCT-USA, Guangsheng (Tianjin)

Technology Co., Ltd., Trump-link (Beijing) Technology Co., Ltd., LIONS Taiwan Technology Inc.

‧ Independent Director, Member of Audit Committee, Compensation Committee, Growth Strategy Committee, Corporate Sustainability Committee at LITE-ON Technology Corp.

SVP (CFO) Elton Yang

‧ MBA at National Chengchi University ‧ Bachelor of International Business at the National Taiwan University ‧ CFO at Quanta Display Inc. ‧ VP at Citibank

‧ Director & President of: TFC, TCC, TWW, TLC, TGC, TTC, ZYES, TNC, TFQ, TWQ, YDCQ, TCQ, QCTBJ

‧ Director of: RTK, QSI, QMB, QCE, FDDT, DGT, KSH, SJDT, KCC, PK Venture Capital Corp., Maxima Capital Management, CDIB BioScience

Internal Audit

Officer -/Female Tracy Li 2019.05 1,982 - - - - - - - - NA -

- 17 -

Venture Management, CDIB Capital Innovation Accelerator Co., Ltd.

VP Steve Cheng ‧ MBA at University of Southern California ‧ Director of Design Department at SYSTEX Corp. ‧ Assistant VP at Xandar International Corp.

NA

VP Michelle

Hsieh

‧ EMBA at the National Taipei University ‧ Bachelor of Science in Electrical Engineering at the National Taiwan

Ocean University ‧ FIC & VP of Portable Computer Group at First International Computer Inc.

NA

VP Brand Chang ‧ Bachelor of Science in Industrial Design, Feng Chia University ‧ Manager of Procurement at In-Chia Electronics Inc.

NA

VP J.J. Wei

‧ Master of Management Science at National Chao-Tung University ‧ CQO & President of NB OEM Business Unit at ASUSTek Computer

Inc. ‧ General Plant Manager at Wistron Corporation ‧ Assistant VP of Quality Assurance Center at Arima Computer

NA

VP Danny Lin

‧ MBA at the University of South Australia ‧ Associate Degree in Technology from the Department of Industrial

Engineering at the National Taipei University ‧ Deputy Chief of Material Control Section at Compal Electronics Inc. ‧ Material Planner at the Cal-Comp Electronics Inc.

NA

VP Terrisa Chung

‧ Bachelor of Industrial Engineering at the National Tsing Hua University

‧ Sales Manager at ADI Corporation

NA

VP Ted Chang

‧ Ph.D., Institute of Aeronautics and Astronautics Engineering at the National Cheng Kung University

‧ Project Director of Quanta-MIT T-Party and Qmulus Projects ‧ Manager & PEM of Local Vehicle Team at Ford Lio Ho Motor

Company

‧ Representative of APEC Business Advisory Council (ABAC) for Chinese Taipei

‧ Convenor of ABAC Digital Working Group Emerging Technology Taskforce

‧ Jointly Appointed Professor of College of Artificial Intelligence , National Yang Ming Chiao Tung University

‧ Board members of Epoch Foundation, Quanta Culture & Education Foundation, Ming-Dao Culture & Education Foundation, and Chinese Medical Advancement Foundation

‧ Visiting Scholar of Computer Science and Artificial Intelligence Laboratory (CSAIL) and also as Principal Investigator (PI) of Computational Health Projects at Massachusetts Institute of Technology (MIT)

VP Thomas

Tsou ‧ MBA at the University of South Australia NA

- 18 -

VP James Jau

‧ Bachelor of Science in Nuclear Engineering and Science at Taiwan Tsing Hua University

‧ Master of Science in Electrical Engineering at Oklahoma State University

‧ Senior Engineer at Wang Computer Inc. ‧ Assistant VP at HTC Corp. ‧ President of Atrust Computer Corp.

NA

VP Roger Huang ‧ Bachelor of Science in Computer Science at the Tam Kang University ‧ Engineer at Compal Electronics Inc.

‧ Director of Plenty Link Technology Co. Ltd., EBN Technology Ltd. and Quantum Optoelectronics Ltd.

VP W.L. Sung ‧ Associate Degree in Electronics at the MingHsin Institute of

Technology ‧ R&D Specialist at A.D.I. Corporation

NA

VP J.C. Tzeng ‧ Master of Mechanical (Manufacturing) Engineering at the Syracuse

University NA

VP Bruce Wu ‧ Doctor of Business Administration at the Victoria University ‧ Associate Degree in Electrical Engineering at the MingHsin Institute

of Technology

NA

VP Jonny Hsu ‧ Bachelor of Science in Electric Engineering at Chung Yuan Christian

University NA

VP Peter Hsieh ‧ Bachelor of Science in Electrical Engineering at Feng Chia University ‧ Manager of OEM sales, Manager of Procurement at Philips Taiwan

NA

VP Michael Wu

‧ EMBA at Shanghai Jiaotong University ‧ Master of Electrical Engineering at Taiwan Tsing Hua University ‧ Bachelor of Science in Electrical Engineering at Taiwan Tsing Hua

University

‧ Director of QCJ

VP Robin Chou ‧ Master of Electrical Engineering at Taiwan Tsing Hua University ‧ Field Application Engineer at Broadcom Inc.

NA

VP Frank

Chuang

‧ Master of Automatic Control Engineering at Feng Chia University ‧ Bachelor of Science in Electrical Engineering at Feng Chia University ‧ Director of Product Value Labs at Acer Inc.

NA

VP Vincent

Yuan

‧ Master of Science in Electrical Engineering at California State University-Fullerton

‧ Master of Science in Computer Science at Northrop University ‧ President of Evergreat Computer Inc. ‧ VP at HonHai Precision Corp. ‧ VP at Celestica Corp. Canada ‧ Chief Operations Officer of Shanghai Unimax Inc.

NA

Internal Audit Officer

Tracy Li ‧ LL.M. in Intellectual Property, Franklin Pierce Law Center ‧ LL.B. at the National Taiwan University

NA

- 19 -

‧ Section Manager of Legal and Intellectual Property Rights at the Department of Computer and Communication Research Lab, Industry Technology Research Institute

‧ Attorney at Law/New York Bar

(3) Remuneration of Directors, Supervisors, Presidents, and Vice President

i. Remuneration of Directors & Independent Directors

Title Name

Remuneration of Directors Ratio of Total Remuneration

(A+B+C+D) to Net Income (%)

(Note 4)

Relevant Remuneration Received by Directors Who are Also Employees (Note 5) Ratio of Total Compensation (A+B+C+D+E+F

+G) to Net Income (%)

(Note 4)

Co

mp

en

sati

on

Pai

d t

o D

ire

cto

rs f

rom

Par

en

t co

mp

any

and

an

Inve

ste

d C

om

pan

y O

the

r th

an t

he

Co

mp

any’

s

Sub

sid

iary

(N

ote

9)

(No

te 9

)

Base Compensation (A)

(Note 1)

Severance Pay (B) (Note 8)

Bonus to Directors (C)

(Note 2)

Allowances (D) (Note 3)

Salary, Bonuses, and Allowances (E)

(Note 5)

Severance Pay (F)

(Note 8)

Profit Sharing- Employee Bonus (G) (Note 6)

Exercisable Employee Stock

Options (H)

New Restricted Employee Shares (I)

The company

Companies in the

consolidated financial statements

(Note 7)

The company

Companies in the

consolidated financial

statements (Note 7)

The compan

y

Companies in the


statements (Note 7)

The compan

y

Companies in the


statements (Note 7)

The compan

y

Companies in the


(Note 7)

The company

Companies in the


statements (Note 7)

The compa

ny

Companies in the


(Note 7)

The company

Companies in the


statements

The company

Companies in the consolida

ted financial

statements

(Note 7)

The company

Companies in the

consolidated financi

al state

ments (Note

7)

The compa

ny

Companies in the consolid

ated financial stateme

nts (Note 7)

Cash Stock Cash Stock

Chairman

Barry Lam

0 0 0 0 8,000 8,000 1,399 1,399 0.04% 0.04% 13,249 13,249 0 0 42,000 0 42,000 0 0 0 0 0 0.26% 0.26% 0

Vice Chairman

& President

C. C. Leung

Director & EVP

C. T. Huang

Director & SVP

Tim Li

- 20 -

Range of Remuneration for Directors

Independent

Director

Dr. Wei-Ta

Pan

0 0 0 0 6,000 6,000 0 0 0.02% 0.02% 0 0 0 0 0 0 0 0 0 0 0 0 0.02% 0.02% 0

Independent

Director

Dr. Pisin Chen

Independent

Director

Hung Ching Lee

Range of Remuneration

Number of Directors: 7

Total of (A+B+C+D) Total of (A+B+C+D+E+F+G)

The company Companies in the consolidated

financial statements The company

Companies in the consolidated financial statements

Under NT$ 1,000,000 - - - -

NT$1,000,000 ~ NT$1,999,999 - - - -

NT$2,000,000 ~ NT$3,499,999

Barry Lam, C.C. Leung, C.T. Huang, Tim Li, Dr. Wei-Ta

Pan, Dr. Pisin Chen, Hung Ching Lee

Barry Lam, C.C. Leung, C.T. Huang, Tim Li, Dr. Wei-Ta

Pan, Dr. Pisin Chen, Hung Ching Lee

Barry Lam, Dr. Wei-Ta Pan, Dr. Pisin Chen, Hung Ching

Lee

Barry Lam, Dr. Wei-Ta Pan, Dr. Pisin Chen, Hung Ching Lee

NT$3,500,000 ~ NT$4,999,999 - - C.C. Leung C.C. Leung

NT$5,000,000 ~ NT$9,999,999 - - - - NT$10,000,000 ~ NT$14,999,999 - - - -

NT$15,000,000 ~ NT$29,999,999 - - C.T. Huang, Tim Li C.T. Huang, Tim Li

NT$30,000,000~ NT$49,999,999 - - - -

NT$50,000,000 ~ NT$99,999,999 - - - -

Over NT$100,000,000 - - - -

Total 7 7 7 7

- 21 -

Note 1: Refers to the remuneration for Directors in the previous year, including salary, allowances, pension, bonuses, awards, etc. Note 2: Note 3:

Refers to the allocation of remuneration for Directors approved by the Board of Directors. Refers to the remuneration for Directors to conduct related professional practices, including honorarium, special disbursement, all types of allowances, housing, company car, and other benefits in kind. In addition, salary of two drivers and one bodyguard amounted to ~NT$3,696,000 is excluded in the remuneration.

Note 4: “Net income after tax” refers to net income after tax for the parent company in the previous year. Note 5: Refers to remuneration for Directors who are also employees of the Company in the previous year which covers salaries, allowances, pensions, bonuses,

awards, honorarium, special disbursements, all types of allowances, housing, company car, and other benefits in kind. If the company provides housing, company car and other forms of transportation or spending exclusive to a particular person, the Company shall disclose the nature and the cost of the asset, the actual rent or rent assessed with reference to fair market price, fuel subsidies and other payments. If drivers are provided, please specify salary provided to such drivers. Such pay shall not be included in the remuneration to Directors. In addition, the salary payment adopted under IFRS 2 “Share-based Payment” shall be included in the remuneration for Directors, including employee stock option, restricted stock options, and subscription of cash capital increase.

Note 6: Refers to employee compensation, including stock and cash, for Directors who are also employees of the Company in the previous year, the company shall disclose the amount of employee compensation approved for distribution by BoD in the previous year.

Note 7: The Company shall disclose the total amount of all types of remunerations paid to the Directors by all companies included in the consolidated financial statements, including this company.

Note 8: The actual amount of pension allocated to Directors who are also employees of the Company in FY2020 is zero. Note 9a: The amount of remuneration that the President and Vice Presidents received from investees other than subsidiaries or the parent company shall be specified

in this column. Note 9b: If the President and Vice Presidents have received remuneration from the parent company or investees other than the Company’s subsidiaries, the amount of

such remunerations shall be combined in column E of the Increments of Remuneration table, and the column shall be renamed “Parent Company and All Investees”.

Note 9c: Refers to the remuneration that the President and Vice Presidents received from the parent company or an investee other than the Company’s subsidiary as its Director, supervisor (member of audit committee), or manager. Such remuneration includes compensation, pay (including the pay for an employee, a Director, and a supervisor), and pay for conducting professional practice.

Note 10: The concept of remuneration disclosed in the above table is different from that of the Income Tax Act. All information disclosed is informative and does not serve for the purpose of taxation.

Note 11: State the policy, system, standard, and structure of remuneration to independent Directors and the relevance to the amount of remuneration in terms of their duty, risk, and time of involvement: The Company has established the “Procedures to Evaluate the Performance of the Board of Directors and Functional Committee” in 2019. At the end of each fiscal year, evaluation on the board of Directors and functional committees are performed based on assessment indicator outlined in the procedures. The performance evaluation results are referenced when determining the remuneration for each Director and nomination for reelection. The board of Directors is authorized to determine the remuneration for Directors and independent Directors with respect to their involvement with and contribution to the Company’s operations and with reference to the general pay standard in the business at home and abroad.

Note 12: The Company is not required to disclose individual remuneration paid to individual Directors.

- 22 -

ii. Remuneration of the Audit Committee Three independent Directors are the ex officio members of the Audit Committee, and their remuneration has been included in remuneration for Directors.

iii. Remuneration of Presidents and Vice Presidents

Unit: NT$ thousands

Title Name

Salary(A) (Note 1)

Severance Pay (B)

(Note 2)

Bonuses and Allowances (C)

(Note 3)

Profit Sharing- Employee Bonus (D)

(Note 4)

Ratio of total compensation

(A+B+C+D) to net income (%)

(Note 5)

Exercisable Employee Stock

Options (Note 6)

New Restricted

Employee Shares

Compensation paid to the

President and Vice President from the

Parent Company and an Invested Company Other

Than the Company’s Subsidiary

(Note 8)

The company

Companies in the


statements (Note 7)

The company

Companies in the


statements (Note 7)

The company

Companies in the


statements (Note 7)

The company

Companies in the


statements (Note 7)

The company

Companies in the


statements (Note 7)

The company

Companies in the


statements (Note 7)

The company

Companies in the


statements (Note 7)

Cash Stock Cash Stock President

C.C. Leung

76,242 76,242 0 0 49,213 49,213 439,500

0 439,500

0 2.23% 2.23% 0 0 0 0 NA VP (note

9)

C.T. Huang

& other

27 VPs

- 23 -

Range of Remuneration for President and Vice Presidents

Note 1: Refers to remuneration for the President and Vice Presidents in the previous year, including salary, allowances, and pension. Note 2: The total amount of pension appropriated in the previous year was NT$4,804,000, and the actual amount of payment was NT$1,477,000. Note 3: Refers to remuneration for the President and Vice Presidents in the previous year, including all kinds of bonuses, awards, honorarium, all types of allowances,

housing, company car, and other benefits in kind. If the company provides housing, company car and other forms of transportation or the spending is exclusive to a particular person, disclose the nature and the cost of the asset, the actual rent or rent assessed with reference to fair market price, fuel subsidies and other payments.

Note 4: The amount of remuneration for employees, including stocks and cash, approved by BOD for distribution to the President and Vice Presidents in the previous year. As estimates of the actual amount is yet to be determined by the time of report publication, the Company leverages the proposed amount of distribution to calculate the distribution for this year according to the proportion of actual distribution from the previous year.

Note 5: “Net income after tax” refers to net income after tax for the parent company in the previous year. Note 6: Refers to the number of shares in employee stock options obtained by the President and Vice Presidents by the end of report publication (exclude the part that has

been executed). Note 7a: The amount of remuneration that the President and Vice Presidents received from the parent company or investees other than subsidiaries shall be specified in

this column.

Range of Remuneration Number of President and Vice Presidents: 29

The Company (note 10) Companies in the consolidated financial statements (note 11)

Under NT$ 1,000,000 - -

NT$1,000,000 ~ NT$1,999,999 - -

NT$2,000,000 ~ NT$3,499,999 C.C. Leung C.C. Leung

NT$3,500,000 ~ NT$4,999,999 - -

NT$5,000,000 ~ NT$9,999,999 W.L. Sung, Frank Chuang, Vincent Yuan W.L. Sung, Frank Chuang, Vincent Yuan

NT$10,000,000 ~ NT$14,999,999 Tim Li, Danny Lin, Jimmy Chin, Ted Chang, Jonny Hsu,

Roger Huang, C.S. Yang, Thomas Tsou, J.J. Wei, Michael Wu, Robin Chou

Tim Li, Danny Lin, Jimmy Chin, Ted Chang, Jonny Hsu, Roger Huang, C.S. Yang, Thomas Tsou, J.J. Wei,

Michael Wu, Robin Chou

NT$15,000,000 ~ NT$29,999,999 C.T. Huang, Mike Yang, James Jau, Bruce Wu, Brand Chang,

J.C. Tzeng, Elton Yang, Alan Chai, Alan Tsai, Peter Hsieh, Terrisa Chung, Steve Cheng, Michelle Hsieh Tony Tan

C.T. Huang, Mike Yang, James Jau, Bruce Wu, Brand Chang, J.C. Tzeng, Elton Yang, Alan Chai, Alan Tsai, Peter Hsieh,

Terrisa Chung, Steve Cheng, Michelle Hsieh Tony Tan

NT$30,000,000~ NT$49,999,999 - -

NT$50,000,000 ~ NT$99,999,999 - -

Over NT$100,000,000 - -

Total 29 29

- 24 -

Note 7b: If the President and Vice Presidents have received remuneration from the parent company or investees other than the Company’s subsidiaries, the amount of such remunerations shall be combined in column E of the Increments of Remuneration table, and the column shall be renamed “Parent Company & All Investees”.

Note 7c: Refers to the remuneration that the President and Vice Presidents received from the parent company or an investee other than the Company’s subsidiary as its Director, supervisor (member of audit committee), or manager. Such remuneration includes compensation, pay (including the pay for an employee, a Director, and a supervisor), and pay for conducting professional practice.

Note 8: The Company shall disclose the total amount of all types of remunerations paid to the President and Vice Presidents by all companies included in the consolidated financial statements, including this company.

Note 9: A total of 28 VPs include C.T. Huang, Mike Yang, James Jau, Alan Tsai, Brand Chang, J.C. Tzeng, Elton Yang, Alan Chai, Peter Hsieh, Terrisa Chung, W.L. Sung, Bruce Wu, Danny Lin, Jonny Hsu, Roger Huang, C.S. Yang, Thomas Tsou, Steve Cheng, Michelle Hsieh, J.J. Wei, Tony Tan (resigned in Mar., 2021), Ted Chang, Michael Wu, Frank Chuang, Robin Chou, Vincent Yuan, Tim Li (resigned in Jan., 2021), and Jimmy Chin (resigned in Dec., 2020).

Note 10: Disclose the name of the President and Vice Presidents in the respective increment table above based on the total amount of remunerations. Note 11: Disclose the name of the President and Vice Presidents in the respective increment tables based on the total amount of remunerations paid to the President and

Vice Presidents by all companies included in the consolidated financial statements, including this Company. Note 12: The concept of remuneration disclosed in the above table is different from that of the Income Tax Act. All information disclosed is informative and does not serve

for the purpose of taxation. Note 13: The Company is not required to disclose individual remuneration paid to each of the top five management personnel, including the President, Vice President, CEO

or CFO.

iv. Management Team Receiving Employee Bonus and Allocation Unit: NT$ thousands

Note 1: A total of 28 VPs include C.T. Huang, Mike Yang, James Jau, Alan Tsai, Brand Chang, J.C. Tzeng, Elton Yang, Alan Chai, Peter Hsieh, Terrisa Chung, W.L. Sung, Bruce Wu, Danny Lin, Jonny Hsu, Roger Huang, C.S. Yang, Thomas Tsou, Steve Cheng, Michelle Hsieh, J.J. Wei, Tony Tan (resigned in Mar., 2021), Ted Chang, Michael Wu, Frank Chuang, Robin Chou, Vincent Yuan, Tim Li (resigned in Jan., 2021), and Jimmy Chin (resigned in Dec., 2020).

Note 2: The amount of remuneration for employees, including stocks and cash, approved by BoD for distribution to the President and Vice Presidents in the previous year. As estimates of the actual amount is yet to be determined by the time of report publication, the Company leverages the proposed amount of distribution to calculate the distribution for this year according to the proportion of actual distribution from the previous year.

Note 3: “Net income after tax” refers to net income after tax for the parent company in the previous year. Note 4: The concept of remuneration disclosed in the above table is different from that of the Income Tax Act. All information disclosed is informative and does not serve

for the purpose of taxation.

Title Name

Employee Bonus - in Stock

(Fair Market Value) (Note 2)

Employee Bonus - in Cash (Note 2)

Total Ratio of Total Amount to Net

Income (%)

Management Team

President C.C. Leung 0 439,500 439,500 1.74%

VPs (note 1) C.T. Huang & 27 other VPs

- 25 -

(4) The ratio of total remuneration paid by the Company and by all companies included in the consolidated financial statements for the two most recent fiscal years to Directors, president and vice presidents of the Company, to the net income. As well as the policies, standards, and portfolios for the payment of remuneration, the procedures for determining remuneration, and the correlation with risks and business performance:

The ratios of remuneration paid to Directors, president and vice presidents of the Company and the companies in the consolidated financial statements in the last two years, to net income were 2.29% and 3.30% in 2020 and 2019 respectively (stock compensation was calculated based on the closing price on the ending date of the Statement of Financial Position, and no stock bonus were distributed in the last two years). In order to implement corporate governance and improve the remuneration system for directors and managers of the Company, the Company has formulated the "Remuneration Committee Charter" and established the "Remuneration Committee" in accordance with the law. The remuneration of managers and employees includes cash remuneration, stock options, dividends, retirement benefits or severance pay, allowances and other measures with substantial incentives. The remuneration policies are described as follows:

(1) Directors:

The remuneration policy of the directors is clearly stipulated in Article 27 of the Articles of Incorporation: When allocating profits for each fiscal year, this Corporation shall set aside no less than two percent (2%) of the profit as employees' bonus and the remuneration of directors shall be no more than 2%. However, the Company should set aside a portion of the profit to offset its accumulated losses first. The Company also formulated “The Performance Evaluation Measures of the Board of Directors and Functional Committee”. The Board of Directors and individual members are parties being evaluated.

At the end of each year, the Board of Directors and functional committee would evaluate the performance for the current year based on the evaluation index. The evaluation should be completed before the end of the first quarter of the following year to ensure that the operation of the Board of Directors is implemented in accordance with relevant laws and regulations. The results should be reported to the Remuneration Committee and be taken as reference to the relevant remuneration distribution.

In addition to the Articles of Incorporation, the execution of the directors’ performance evaluation and the convention of general industry are also taken as reference to determine the remuneration of directors. The remuneration is closely related to the performance of the business. It should be reviewed by the Remuneration Committee and be implemented after being approved by the Board of Directors. The information should be reported to shareholders’ meeting and be disclosed in the annual report.

- 26 -

(2) Manager: The remuneration of managers is based on the relevant regulations of the Company, considering the position, education,

experience, industry status, and their performance and achievement of long- and short-term goals. The remuneration is adjusted according to the profitability and operational risks of the Company. The standard of the performance evaluation of managers, the annual and long-term performance goals, and the policies, regulations, standards, and structures of the remuneration are regularly reviewed by the Remuneration Committee with the annual remuneration distribution plan. The remuneration of managers is submitted to the Board of Directors for approval.

- 27 -

3. Implementation of Corporate Governance (1) Operation of the Board of Director (BoD)

i. The BoD held seven board meetings in the previous years (A), and the attendance of Directors is tabulated below:

Title Name Attendance in Person (B)

Attendances Through Proxy

Attendance Rate (%) [B/A]

Remarks

Chairman Barry Lam 7 0 100.0 -

Vice Chairman C.C. Leung 7 0 100.0 -

Director C.T. Huang 7 0 100.0 -

Director Tim Li 7 0 100.0 Resigned in Jan., 2021

Independent Director

Dr. Wei-Ta Pan 7 0 100.0 -


Dr. Pisin Chen 7 0 100.0 -


Hung Ching Lee 7 0 100.0

ii. Additional Disclosure:

A. The date of the meeting, session, content of the motion, opinion expressed by all independent Directors, and the Company’s response to such opinions shall be specified when any one of the following circumstances occur during Board meetings: (1) Matters specified in Article 14-3 of the Securities and Exchange Act:

All independent Directors had attended the Board meetings and approved all matters specified in Article 14-3 of the Securities and Exchange Act without objection in FY2020 and as of the date of this report's publication.

(2) In addition to the above matters, other objections or qualified opinions made by independent Directors that were recorded or with written statements that require resolutions by the Board: NA.

B. Execution of Directors’ avoidance of motions in conflict of interests:

The Company has established “Rules and Procedures for the Board of Directors Meeting” as a guideline for BoD operation to enforce corporate governance, to optimize organizational supervision, and to strengthen organizational management. In the event that a proposal involves conflict of interests of a Director and such proposal may harm the organization’s interests, the related Director will follow the principle of Directors’ avoidance of motions in conflict of interests to protect the interests of the Company and its shareholders.

Execution of avoidance of motions in conflict of interests is summarized as follows:

Meeting Dates Resolutions

2020.03.30

Donation to the Chinese National Association of Industry and Commerce (CNAIC).

To donate NT$300,000 to support the operation of CNAIC. In accordance with the Company Act, the related party, Mr. Barry Lam, also serves as the Director of the CNAIC. Thus, Chairperson, Mr. Lam stepped

- 28 -


aside from the discussion and voting of the proposal to comply with governance stated in the Company Act to avoid conflict of interests. Aside from the Chairperson, Mr. Barry Lam, all Directors attending the meeting approved the proposal unanimously.

Donation to the SINOCON Industrial Standards Foundation (SINOCON). To donate NT$200,000 to support the operation of SINOCON. The

SINOCON foundation aims to “promote the establishment of common standards across the strait with the combined efforts of industry, the government, academia, and research in order to strengthen cross-strait exchanges and cooperation of industrial standards.”

In accordance with the Company Act, the related party, Mr. Barry Lam, also serves as a managing Director of the SINOCON. Thus, Chairperson, Mr. Lam, stepped aside from the discussion and voting of the proposal to comply with governance stated in the Company Act to avoid conflict of interests. Aside from the Chairperson, Mr. Barry Lam, all Directors attending the meeting approved the proposal unanimously.

2020.05.14 Donated two notebook computers to Quanta Arts Foundation (QAF) for administrative work, the total donation amount is estimated at NT$100,000 based on the residual value.

In accordance with the Company Act, the related party, Mr. Barry Lam, also serves as the Chairperson of QAF. Thus, Chairperson, Mr. Lam, stepped aside from the discussion and voting of the proposal to comply with governance stated in the Company Act to avoid conflict of interests. Aside from the Chairperson, Mr. Barry Lam, all Directors attending the meeting approved the proposal unanimously.

2020.08.13 Proposal of FY2019 employee remuneration to management team. This proposal has been reported to AGM, and the Remuneration Committee has approved the details of remuneration for management team. With respect to the Company Act, related parties, Mr. C.C. Leung, Mr. C.T. Huang, and Mr. Tim Li, also serve as the Company’s management personnel and receive employee compensation, thus the three Directors stepped aside from the discussion and voting of the proposal to comply with governance. Aside from above stated three Directors, Mr. C.C. Leung, Mr. C.T. Huang, and Mr. Tim Li, all Directors attending the meeting approved the proposal unanimously.

To provide NT$35.72 million to Quanta Culture & Education Foundation as operation funding, funds may be used in different stage of operation.

With respect to the Company Act, the related party, Mr. Barry Lam, also serves as the Chairperson of the foundation. Thus, Chairperson, Mr. Lam, stepped aside from the discussion and voting of the proposal to comply with governance. Aside from the Chairperson, Mr. Barry Lam, all Directors attending the meeting approved the proposal unanimously.

- 29 -


2020.11.13 In response to Taiwan Digital Transformation of Chromebook Donation Project, donated additional $3M to Quanta Culture & Education Foundation to execute the project.

With respect to the Company Act, the related party, Mr. Barry Lam, also serves as the Chairperson of the foundation. Thus, Chairperson, Mr. Lam, stepped aside from the discussion and voting of the proposal to comply with governance. Aside from the Chairperson, Mr. Barry Lam, all Directors attending the meeting approved the proposal unanimously. To provide NT$30 million to Quanta Arts Foundation (QAF) as operation

funding, funds may be used in different stage of operation. Donated ten notebook computers to the foundation for administrative

work, the total donation amount is estimated at NT$350,000 based on the residual value.

With respect to the Company Act, the related party, Mr. Barry Lam, also serves as the Chairperson of the foundation. Thus, Chairperson, Mr. Lam, stepped aside from the discussion and voting of the proposal to comply with governance. Aside from the Chairperson, Mr. Barry Lam, all Directors attending the meeting approved the proposal unanimously.

2020.12.22 Proposal of FY2020 remuneration to management team. The Remuneration Committee has approved the details of remuneration to management team. With respect to the Company Act, related parties, Mr. C.C. Leung, Mr. C.T. Huang and Mr. Tim Li stepped aside from the discussion and voting of the proposal to comply with governance. Aside from above stated three Directors, Mr. C.C. Leung, Mr. C.T. Huang and Mr. Tim Li, all Directors attending the meeting approved the proposal unanimously.

C. Evaluation of the Board of Directors:

The Company has established the “Procedures to Evaluate the Performance of the Board of Directors and Functional Committee” in 2019 and the procedures are modified in December 2020 to contract external professional independent institutions or external professional scholars for assessment at least once every three years. At the end of each fiscal year, the Company would evaluate performance of the board and the committee for the year based on evaluation indicators. The evaluation is completed before the end of the first quarter of the following year to ensure the operation of the Board of Directors is in compliance with relevant law and regulations. FY2020 evaluation results were submitted to the Board of Directors and Remuneration Committee meeting held in March, 2021.

- 30 -

Evaluation Cycle

Evaluation Period

Evaluation Scope Method of Evaluation Evaluation Contents

Once a year

January 1–December 31, 2020

Board of Directors

Individual board members

Functional committees

Self-assessment of the Board Self-assessment of the Board

members Self-assessment of the Audit

Committee Self-assessment of the

Remuneration Committee

(Note)

Note: The evaluation contents are conducted in accordance with Article 7 of the “Evaluation indicators and scoring criteria” of the “Procedures to Evaluate the Performance of the Board of Directors and Functional Committee.” The Company shall take into consideration its condition and needs when establishing the criteria for evaluating the performance of the Board of Directors and functional committee, which should cover, at a minimum, the following five aspects: 1. Participation in the operation of the Company; 2. Improvement of the quality of the Board of Directors and functional committee

decision making; 3. Composition and structure of the Board of Directors and functional committee; 4. Election and continuing education of the Directors and functional committee;

and 5. Internal control

The criteria for evaluating the performance of the board members, should cover, at a minimum, the following six aspects: 1. Alignment of the goals and missions of the Company; 2. Awareness of the duties; 3. Participation in the operation of the Company; 4. Management of internal relationship and communication; 5. The Director's professionalism and continuing education; and 6. Internal control

The indicators of Board and committee performance evaluation shall be determined based on the operation and needs of the Company and suitable and appropriate for evaluations by the Company, subject to regular reviews and constructive comments of the Remuneration Committee. Scoring criteria may be modified and adjusted based on the Company's needs. The weighted scoring method may be adopted based on the aspects of evaluation.

D. Evaluation of BoD competency and execution in the present and previous years:

The Company has established of the “Rules and Procedure for the Board of Directors Meeting”, thus implementation and operation of Board meetings all comply with the rules, related laws and regulations. In addition, resolutions of material matters are disclosed on the Market Observation Post System (MOPS) and the corporate website. The chief internal auditor also sits in Board meetings to report the status of internal control implementation and audit reports are also provided as reference.

- 31 -

As one of the two major units of Quanta’s governance framework, the Company’s Board consists of five to nine Directors in accordance with the Articles of Incorporation. The Company adopts candidate’s nomination system, where shareholders elect among the nominees listed in the roster of candidates. The total number of shares (stake) held by all Directors is subject to regulations of the securities supervisory authorities. The current Board consists of seven Directors, including three independent Directors. An Audit Committee is also established with three independent Directors as the ex officio members to exercise the powers of supervisors. In addition, the Remuneration Committee is formed by two independent Directors and one senior executive officer to assess and review overall salary and compensation policy of the Company. The Committee periodically reviews the compensation policy, system, standards, and structure for Directors and management team.

(2) Operation of the Audit Committee i. The Audit Committee held five committee meetings in the previous years (A), and the

attendance of the committee members is tabulated below: Title Name Attendance

in Person (B)

Attendance Through

Proxy

Attendance Rate (B/A) (%)

Remarks

Chairman Dr. Wei-Ta Pan 5 0 100.0 Re-appointed on

2019/06/21

Committee Member

Dr. Pisin Chen 5 0 100.0 Re-appointed on

2019/06/21

Committee Member

Hung Ching Lee 5 0 100.0 Newly appointed on

2019/06/21

On March 31, 2016, the Board approved the “Audit Committee Charter” as a reference to establish the Audit Committee to supervise the fair expression of the Company’s financial statements, the selection or dismissal of certified public accountants (CPAs) and assessment of their independence and performance, effective implementation of the internal control, and legal compliance of the Company, as well as to control the inherent and potential risks.

The 1st Audit Committee was established on June 24, 2016 to replace the duties and functions of Supervisors. The Audit Committee consists of three independent Directors, including Dr. Wei-Ta Pan, Dr. Pisin Chen, and Mr. Hung Ching Lee, as the ex officio members and Dr. Wei-Ta Pan was elected to convene the Committee and served as the Chair of Committee meetings. The 2nd Audit Committee was re-elected to accompany the newly elected BoD on June 21, 2019 with three independent Directors elected as the Audit Committee members, including Dr. Wei-Ta Pan, Dr. Pisin Chen and Mr. Hung Ching Lee. While, Dr. Wei-Ta Pan was elected to convene the Committee and served as the Chair of

- 32 -

Committee meetings. The tenure is for three years from June 21, 2019 to June 20, 2022, the same termination date as the end of the BoD term.

ii. Additional Disclosure:

A. The date of the meeting, session, content of the motion, expressed by all independent Directors, and the Company’s response to such opinions shall be specified when the operation of Audit Committee is under any one of the following circumstances: (1) Matters specified in Article 14-3 of the Securities and Exchange Act:

All independent Directors had attended the committee meetings and approved all matters specified in Article 14-3 of the Securities and Exchange Act without objection in FY2020 and as of the date of this report's publication.

(2) Matters other than above stated which were not approved by the Audit Committee but resolved by over two thirds of all Directors: NA.

B. Execution of independent Directors’ avoidance of motions in conflict of interests:

No avoidance of motions in conflict of interests was reported in FY2020.

C. Communication between the Audit Committee, Independent Directors, the Chief Internal Auditor and accountants:

(1) After submitting the audit report and follow-up report, the chief internal

auditor hands over audit items for review to all independent Directors before the end of following month. Should independent Directors be interested in further understanding of the status of the audit and follow-up results, they could contact the chief internal auditor at any time. The chief internal auditor would sit in board meetings to report the audit findings and to answer questions raised by Directors.

(2) The chief internal auditor had separate interviews with each independent

director every year. A total of four interviews were held in FY2020. At the interviews, the chief internal auditor reported the audit progress and details regarding audit implementation. During one of the interviews, an independent Director inquired whether an “Employee Feedback Mailbox” was set up and how it operates. The chief internal auditor responded by indicating that an employee feedback mailbox has been established for years and current operation of the mailbox. No significant anomalies or violations, nor matters to be reported to independent Directors immediately were found in the FY2020 annual audit. Summaries of interviews are as follows:

- 33 -

Items Description

Names of independent Directors interviewed, time of interview and suggestions offered

Hung Ching Lee

Dr. Wei-Ta Pan

Dr. Pisin Chen

Hung Ching Lee

2020/06/12 2020/08/07 2020/10/15 2020/12/10

Description of the audit plan

The FY2020 audit plan for the Company’s headquarters in Taiwan and manufacturing sites in China was submitted to the independent Directors for review and suggestion on additional audit items.

NA NA NA NA

Description of work performed

An account on audit items covered, methodology and progress achieved by the audit team prior to the interview.

NA NA NA NA

Description of audit progress

1. As of the end of this interview, areas of improvement have been found during the FY2020 audit, the audit team has proposed suggestions for rectification and requested relevant departments to act accordingly; no major flaws have been identified.

2. The audit report has been submitted to the independent Directors for review.

NA NA NA NA

Other discussion items

1. Is there any suggestion or items that require further attention in auditing?

2. Is there any recommendations or corrections to be made?

3. Has the Company setup “Employee Feedback Mailbox” system? If so, how does it operate?

NA NA NA No further questions after the chief internal auditor addressed the concern in details.

iii. Highlights of work performed by the Audit Committee for the year:

A. The operations of the Audit Committee revolve around the supervision and monitoring of the following items and these are the highlights of the work performed by the Committee for the year: Fair presentation of the Company’s financial statements The selection (and dismissal), independence and performance of certified public

accountants for the Company Effectiveness of implementation of the Company’s internal control system Compliance with relevant laws and regulations of the Company Management of existing or potential risks of the Company

B. Work summary: Apart from reviewing the annual business report, financial

statements, proposal for the allocation of distributable earnings and issuance of audit review reports, the Committee is also responsible for reviewing the Company’s financial statements and communicating with the CPA and auditors when necessary in order to understand the auditing process, accounting policies and procedures. In addition, the Committee also participates and reviews relevant tasks of significance.

- 34 -

C. Important resolutions made by the Audit Committee meeting:

Date Term Section Resolution Summary Opinion of Independent Directors

and Company’s Response

2020.01.13 2 5 Approved capital increase subscription for subsidiary, QMB Co., Ltd.

Approved by all independent Directors unanimously.

2020.03.30 6 Reported the status of performance evaluation on the Board of Directors and Functional Committee.

Approved FY2019 financial statements.

Approved CPA audit report of FY2019 financial statements.

Approved business report of the year.

Approved the effectiveness evaluation and statement of internal control.

Approved amendments on the internal control procedure.


2020.05.14 2 7 Approved FY2020 Q1 financial statements.

Approved CPA audit report of FY2020 Q1 financial statements.

Approved intercompany loan transactions


2020.08.12 8 Approved FY2020 H1 financial statements.

Approved CPA audit report of FY2020 H1 financial statements.


2020.11.13 9 Approved FY2020 Q3 financial statements. Approved CPA audit report of FY2020 Q3 financial

statements.

Approved capital increase subscription for subsidiary, QMB Co., Ltd.


(3) Corporate Governance Implementation Status and Deviations from “Corporate

Governance Best Practice Principles for TWSE/TPEx Listed Companies” (Governance Best Practice)

Evaluation Item

Implementation Status Deviations and the cause(s) of

deviations from “Governance Best

Practice”

Yes No Abstract Illustration

1. Does the company establish and disclose the Corporate Governance Best Practice Principles based on “Governance Best Practice”?

✓ Corporate Governance Best Practice Principles was approved by The Board of Directors and disclosed on the Corporate website and the Market Observation Post System.

No Significant differences

2. Shareholding structure and shareholder’s rights: (1) Does the company establish internal

procedures for handling shareholders’ suggestions, questions, disputes and litigation, and implementation based on the procedure?

✓

The Company has established spokesperson and deputy spokesperson system, as well as the stock affair personnel to handle shareholders’ suggestions and disputes. Content of our Corporate website is available both in Chinese and English for investors to make enquiries and leave messages. Legal related enquiries are directed to the Legal Affairs Department.


- 35 -

Evaluation Item



Practice”


(2) Does the company possess the list of

its major shareholders as well as the ultimate owners of those shares?

✓ The Company’s stock affair operation is processed in accordance with the “Regulations Governing the Administration of Shareholder Services of Public Companies,” we have also contracted external institutions to implement stock affair services and timely keep track of relevant information. Good relationships and unimpeded communication with major shareholders is constantly maintained and changes in shareholding status of Directors, management teams, and major shareholders holding more than 10% of the company’s shares are timely tracked.

(3) Does the company establish and implement a risk control mechanism and firewall between its affiliates?

✓ The Company and its affiliates operate independently, each has established its own internal control systems and regulations. Moreover, the Company and its affiliates each has developed its own level of authorization based on business needs and implements it accordingly. The Company dependably implements audit functions of the internal audit department in order to increase its independence and interaction with the Audit Committee. The Company also follows relevant regulations to ensure legal compliance, and to implement the CPA rotation system as promoted by the government to enhance the independence of CPA. The above efforts would not only prevent corruption, but also helps the Company to remain profitable.

(4) Does the company establish internal rules against insider trading with undisclosed information?

✓ The Company has established “Internal Material Information Processing Procedure” and the “Insider Trading Prevention Operating Procedures” and keeping track of shareholding status of related parties and insiders

- 36 -

Evaluation Item



Practice”


(Directors, management teams, and shareholders holding more than 10% of the company’s shares) in accordance with the Securities and Exchange Act. Relevant information is disclosed monthly on the website designated by the authority — Market Observation Post System.

In addition, designated personnel would send emails to all insiders in the beginning of every month as reminders to report changes in shareholding status on a periodic basis, summaries of important regulations and attachments of relevant documentations are also enclosed in emails for reference. When there is a newly appointed insider, a designated personnel would provide necessary education and training and designated department is also established to provide necessary counseling services. In order to establish employee awareness and attention to relevant laws and regulations, the "Prevention of Insider Trading" has been included in the training course for new employees since April 6, 2021. The training courses include the definition of insider trading, legal sources, insider trading parties, and relevant responsibilities in the event of violation. The content is also included in the Company’s new employee orientation manuals. In addition to providing training material, the content is also placed on the Company's internal website for employees to review and refer to at any time. In the future, online courses will be developed pending on needs for employees to take as an elective course. As of the end of April, 2021, a total of 174 employees have undergone training courses on insider trading.

- 37 -

Evaluation Item



Practice”


3. Composition and responsibilities of the Board of Directors: (1) Does the Board develop and

implement a diversified policy for the composition of its members?

✓

Election of the Board of Directors: The Company values the importance of corporate governance and our corporate mission is sustainable management with focus on enterprise succession. The Company introduced the system of independent directors in 2001, established the Audit Committee in 2016, and the Remuneration Committee in 2011. The Board of Directors consists of 7 seats, of which 3 are independent Directors. The "Rules and Procedures for the Board of Directors Meetings" have been established in accordance with the law and regulation. Functions and operations of the Board of Directors are governed by these Rules and Procedures as well as relevant regulations. Furthermore, the Company has specified required competencies for the Board of Directors in Chapter 3 “Directors Competency Enhancement” of the “Corporate Governance Best Practice Principles,” as a reference for Board member diversification. Members of the Board of Directors are nominated and elected through “Candidate Nomination System” as specified in the Articles of Incorporation. Apart from assessing the education and experience of candidates, the Company also references to the opinions of stakeholders and abide by the “Rules and Procedures for Election of Directors” and the “Corporate Governance Best Practice Principles” to ensure the diversity and independence of Directors. Members of the Board of Directors should not only have professional background and professional techniques, but strength in the Company’s business planning and operations should also well


- 38 -

Evaluation Item



Practice”


equipped. In order to enhance professionalism of Board members, directors (including independent directors) are encouraged to participate in continuing education, suitable and relevant training courses are also recommended and encouraged. All independent directors have completed training hours and gradually optimizing the performance of the Board. Furthermore, high level management personnel are arranged to participate in board meetings of affiliates, enhancing their understanding of the operation of board meetings. High-level management personnel are encouraged to increase their involvement with the operations of various business units, while job rotation and work abroad experiences are also provided. Apprentice training program and job rotation program are promoted with high-level management teams. The current nomination of the Board of Directors has seven seats and all of them are male citizens of the Republic of China including three seats for independent Directors. Directors nominated are equipped with different expertise, professional background, industry knowledge, skills, and competencies required by their duties to optimize the structure of the Company’s Board of Directors. Of the Directors who are also executives of the Company, Mr. Barry Lam is well equipped with forward-looking ambition with unique vision and strong marketing capabilities. Mr. C.C. Leung is specialized in operational judgement and operational management. While Mr. C.T. Huang is specialized in leadership and

- 39 -

Evaluation Item



Practice”


factory management and Mr. Tim Li is well equipped with professional background in finance and accounting. All four Directors have extensive industry-specific knowledge and view of global market, as well as risk management capabilities. Each of the three independent Directors has his own expertise: Dr. Wei-Ta Pan is specialized in legal affairs and is familiar with social welfare; Dr. Pisin Chen is a physicist, familiar with industry-specific knowledge and equipped with an international market view; and Mr. Hung Ching Lee is equipped with professional knowledge in accounting and is a licensed senior securities specialist. Mr. Lee was an underwriting committee member of the Taiwan Securities Association, senior manager at the TWSE and securities firms. Mr. Lee has extensive knowledge in finance and securities related regulations. Thus, members of the Board of Directors are able to provide professional advices and constructive suggestions on the Company’s major operational matters. Within the Board of Directors, the percentage of Directors and independent Directors who are also employees of the Company is both 43%, employment of each independent Director is less than 3 years, three to six years, and over nine years. Four Directors are over age 70 and one is between age 60 and 69, while two are under age 60. None of the Directors are within the second degree of kinship. Execution of Board member diversification is disclosed in the note section below.

(2) Does the company voluntarily establish other functional committees in addition to the Remuneration

✓ The Remuneration Committee is made of two independent Directors and one designated member, who are responsible for assessing,

- 40 -

Evaluation Item



Practice”


Committee and the Audit Committee?

reviewing, and establishing the Company’s overall remuneration policy. In addition, the Committee reviews the performance assessment and the remuneration policy, system, standard, and structure of Directors and management teams periodically (at least twice every year). In addition to the Remuneration Committee, the Company has also established Audit Committee in June 2016, with three independent Directors as the ex officio committee members. Furthermore, Quanta’s CSR Committee is established and responsible for organizing the operation of the Company’s CSR system and the preparation of the CSR report.

(3) Does the company establish a

standard to measure the performance of the Board and implement it annually, and are performance evaluation results submitted to the Board of Directors and referenced when determining the remuneration of individual Directors and nominations for reelection?

✓ The Company has established the “Procedures to Evaluate the Performance of the Board of Directors and Functional Committee” in 2019. At the end of each fiscal year, evaluation on the board of Directors and functional committees are performed based on assessment indicator outlined in the procedures. The evaluation is completed before the end of the first quarter of the following year and evaluated by external professional, independent organization or external professional scholars at least every three years. The performance evaluation results are submitted to the Board of Directors and referenced when determining the remuneration of individual Directors and nominations for reelection. The 2020 performance evaluation was completed in Q1 2021, and the performance evaluation results were submitted to the Board of Directors and the Remuneration

- 41 -

Evaluation Item



Practice”


Committee by the end of March, 2021. The audit team has also included the performance evaluation procedures as part of the audit items to ensure the operation of the Board of Directors is in compliance with relevant law and regulations.

(4) Does the company regularly evaluate the independence of CPAs?

✓ The Company has selected accounting firms and accountants with high credit rating and neither is a related party nor an interested party of the Company, therefore we deem no issue with their independence. The Board of Directors regularly (at least once a year) or pending on individual projects needs to assess the independence, suitability, and quality of audit service of our certified public accountants and related audit personnel. We also request CPAs and CPA firms to provide related information and a statement of impartiality and independency to state the scale, reputation, the length of consecutive service provision, the nature and degree of non-audit services provided, audit and certification fees, peer evaluation, any engagement in litigious activities or requests for corrections from competent authorities, or cases under investigation, audit service quality, provision of continuing education, and interaction with management team and internal audit officers. These statements are submitted to the Board of Directors for assessment to ensure legal compliance, to cooperate with government rules and related laws and regulations. The Company also requests the CPA firm to implement the CPA rotation system in compliance with government regulations and to maintain the independence of CPAs.

- 42 -

Evaluation Item



Practice”


The assessment results for the past two years were resolved at the Board meetings on December 19, 2019 and December 22, 2020 respectively.

4. Does the company appoint a suitable number of competent personnel and a supervisor responsible for corporate governance matters (including but not limited to providing information for Directors and supervisors to perform their functions, assisting Directors and supervisors with compliance, handling work related to meetings of the board of Directors and the shareholders' meetings, and producing minutes of board meetings and shareholders' meetings)?

✓ With respect to the resolution made by the Audit Committee and the Board of Directors, the Company has established the “A Standard Operational Protocol for Responding to Requests from Directors” in accordance with the “Operation Directions for Compliance with the Establishment of the Board of Directors by TWSE Listed Companies and the Board’s Exercise of Powers” on May 15, 2019 and appointed Ms. Tracy Li, Assistant VP of the Legal Department, as the new internal audit officer. Key responsibilities of the newly appointed internal audit officer include provision of information required for the Directors to perform their duties; assistance in the Directors' compliance of law; handling of matters relating to the Board of Directors meetings and shareholders’ meetings in compliance with law; assurance of the operations of shareholders’ meetings and Board of Directors meetings in compile with relevant laws and corporate governance. Details on execution are shown in notes below.

Besides, the Company has established CSR Committee in charge of implementing the operation of CSR system, corporate governance, and stakeholder engagement. There are four sub-committees under the CSR Committee, including the Corporate Government and Ethics Committee, Environmental Protection Committee, Green Product


- 43 -

Evaluation Item



Practice”


Committee, and Social Participation Committee. The human resources department and CSR team are in charge of the operation of CSR system and compilation of CSR report.

5. Does the company Does the company establish a communication channel and build a designated section on its website for stakeholders (including but not limited to shareholders, employees, customers, and suppliers), as well as handle all the issues they care for in terms of corporate social responsibilities?

✓ The Company has set up the “Stakeholder Engagement” section on our Corporate website. Identification of stakeholders are in accordance with the AA1000 stakeholder engagement standards, based on the five principles of responsibility, influence, proximity of relationship, dependency, and representation. Members of the CSR Committee Evaluation Task Force and relevant representatives would identify significant stakeholders based on the above principles. The five major categories of stakeholders identified are shareholders, investors, customers, suppliers, employees, and communities. In order to strengthen the communication and cooperation with major stakeholders and to ensure the achievement of undertaken goals, Quanta's CSR Committee regularly communicates and discusses major economic, social and environmental issues, the achievement of goals and strategic guidelines, and compiles relevant information on the results. The results of deliberations with various stakeholders and CSR recommendations are submitted to the Board of Directors for approval before implementation, and reports on the implementation status of the previous year. Communication with stakeholders for the past two years was reported to the Board of Directors on December 19, 2019 for FY2019 and in the first quarter of 2021 for FY2020 results.


- 44 -

Evaluation Item



Practice”


For details, please visit our corporate website and our CSR Report. https://www.quantatw.com/Quanta/english/csr/contact_sc.aspx

6. Does the company appoint a professional shareholder service agency to handle shareholder affairs?

✓ The Company has appointed professional shareholder service agency to handle shareholder affairs since the Company was listed for public offering.


7. Information disclosure: (1) Does the company have a website to

disclose both financial standings and the status of corporate governance?

✓

The Company has established Corporate website available both in Chinese and English. The “Investor Relations” section of the Corporate website discloses all major announcements, financial data and corporate governance. Content of the “Investor Relations” section is regularly updated. For details, please refer to: http://www.quantatw.com


(2) Does the company have other information disclosure channels (e.g. building an English website, appointing designated personnel to handle information collection and disclose, creating a spokesperson system, and webcasting investor conferences)?

✓ Aside from setting up the Corporate website, the Company has also established various channels to communicate with investors:

• Designated personnel in charge of collecting and disclosing material information, as well as Corporate website management. Designated personnel from other supporting departments, including the Finance Department, Accounting Department, and Management Information System Department are also responsible for collecting and providing relevant information.

• Spokesperson system is also well established.

• Investor conferences: the Company regularly hosts investor conferences and relevant information is timely disclosed on the Corporate website and the Market

https://www.quantatw.com/Quanta/english/csr/contact_sc.aspx



- 45 -

Evaluation Item



Practice”


Observation Post System for public access.

(3) Does the company announce and report annual financial statements within two months after the end of each fiscal year, and announce and report Q1, Q2, and Q3 financial statements, as well as monthly operation results, before the prescribed time limit?

✓ The Company has affiliates across Asia, America, and Europe. Financial statements are published according to the schedule specified by competent authorities without any plan for advance announcement.

8. Is there any other material information to facilitate a better understanding of the company’s corporate governance practices (e.g. including but not limited to employee rights, employee wellness, investor relations, supplier relations, stakeholder rights, training records for Directors and supervisors, the implementation of risk management policies and risk evaluation measures, the implementation of the customer relations policies, and purchasing insurance for Directors and supervisors)?

✓ The Company’s corporate governance practices are detailed in the “Corporate Governance and Ethics” section of our CSR report that the Company publishes every year. The CSR report is verified by a third-party certification authority. The Company regularly and periodically host internal meetings to discuss with senior executives on the evaluation results, major improvements, and recommendations. The CSR report is reported to the Board of Directors and available on Company’s website for inquiry and download. (https://www.quantatw.com/Quanta/english/csr/csr_list.aspx) Please refer to note below for details.


9. Please explain the improvements which have been made in accordance with the results of the Corporate Governance Evaluation System released by the Corporate Governance Center, Taiwan Stock Exchange, and provide the priority enhancement measures.

The Company was ranked top 6% to 20% enterprises in Taiwan during the seventh “Corporate Governance Evaluation” in year 2020. Apart from establishing the “Corporate Governance Best Practice Principles,” the Company has assigned designated team to keep track on the assessment indicators and to make recommendations for implementation and improvement to the decision-making unit.

Note: Item 3. Diversity policy and implementation of Board members: Planning of the Company’s diversified Board of Directors includes no less than 1/7 of the board members should be equipped with financial and legal expertise and no less than 2/7 of the board members with operational judgment and management capabilities. Increasing the number of female Board members is also in consideration of gender equality in the future. No less than 3/7 seats of independent directors.

https://www.quantatw.com/Quanta/english/csr/csr_list.aspx


- 46 -

Name

Basic Composition Industry Experience Areas of Expertise

Nat

ion

alit

y

Gen

der

Co

ncu

rren

t Em

plo

yee

Age (years) Term of office of

independent director (years)

Fin

ance

Ass

et M

anag

em

ent

Op

erat

ion

s M

anag

em

ent

Aca

dem

ia

Fin

ance

Lega

l

Info

rmat

ion

Tech

no

logy

Ris

k M

anag

em

ent

51-60

61-70

Over 70

Below 3

3-9

Above 9

Barry Lam

Cit

izen

of

the

Rep

ubl

ic o

f C

hin

a (R

.O.C

.)

male ✓ ✓ ✓ ✓ ✓

C. C. Leung

male ✓ ✓ ✓ ✓ ✓ ✓

C. T. Huang

male ✓ ✓ ✓ ✓ ✓

Tim Li male ✓ ✓ ✓ ✓ ✓ ✓ Dr.

Wei-Ta Pan

male ✓ ✓ ✓ ✓

Dr. Pisin Chen

male ✓ ✓ ✓ ✓

Hung Ching

Lee

male ✓ ✓ ✓ ✓

Item 4. Annual operations of the Chief Corporate Governance Officer were carried out as follows:

1. Assist independent Directors and Directors in carrying out their respective duties, provide required information, and arrange for Directors' continuing education courses: Provide members of the Board of Directors information on the latest amendments to laws and regulations

related to the Company's business areas and corporate governance at the time of their appointment, and henceforth update them regularly.

Review the confidential level of information and provide the Company information required by the Directors, and to maintain smooth communication and exchange between the Directors and various business executives.

In accordance with the Corporate Governance Best Practice Principles, the independent Directors assist in arranging meetings with internal auditors or attesting CPAs when necessary to understand the Company's financial operations.

Assist independent Directors and Directors in preparing annual education plans and arranging courses according to the characteristics of the Company's industry and the academic and professional background of the directors.

2. Assist the Board of Directors and the shareholders' Meetings in compliance with relevant procedures and

resolutions: Report to the Board of Directors, independent Directors, Audit Committee or Supervisors on the status of the

Company's corporate governance operations and confirm that the Company's shareholders' meetings and board meetings are held in compliance with relevant laws and corporate governance.

Assist and remind the directors of the rules and regulations that should be observed when conducting business or making formal resolutions during Board meetings, and advise the Board of Directors in the event of possible illegal resolutions.

After the Board meeting, the Board of Directors is responsible for reviewing the release of material information regarding major resolutions of the Board of Directors and ensuring the legality and accuracy of the content of the material information to protect the parity of investors' transaction information.

The Board of Directors is required to notify the directors seven days in advance of the proposed meeting, convene the meeting and provide the meeting information, and remind them in advance of any issues that require recusal of interests, and complete the minutes of the Board of Directors meeting within 20 days after the meeting.

- 47 -

3. Pre-register the date of the shareholders' meeting, prepare the notice of the meeting, the meeting handbook, and the minutes within the legal period, and register the changes in the Articles of Incorporation or the election of directors.

Item 8. Supplementary notes that helps to understand the operation of corporate governance:

1. Training and Succession Planning for Key Management Officers The Company is committed to the cultivation and development of talents, and has established Quanta Elite School to design and plan management development blueprints for junior, mid-level and senior managers. Accordingly, the Company offers management training courses for managers at all levels every year, and stipulates that completion of specific mandatory training courses is required as a necessary pre-condition for promotion, which will encourage Company officers and supervisors to take continuing education courses in management and professional disciplines. In addition, the Company kick-started the HiPo Program (High Potential Program) in 2010, and has since trained 105 mid and high-level personnel with great potential. From nomination, assessment, training, development, and evaluation, we systematically cultivate outstanding talents at all levels of the Company to maintain organizational competitiveness. In the Hi-Po Program, the cultivation methods include comprehensive assessment of managerial capability, personal development plan, EMBA, seminar, mentoring, and project assignment, etc. The content topics include financial management, human resources and organization, strategic management, innovation, operations management, and marketing management, etc. Through a variety of dynamic learning topics, the Program aims to cultivate decision making ability in order to reserve high potential management team for the Company and to build up a pool of talents for succession.

2. Employee Rights and Employee Care: We believe that employees are our most important assets of the Company. Greater future can only be achieved when employees are fully devoted and are willing to trust the Company. Therefore, we are fully devoted into creating a work environment that emphasizes on labor-management relationship with hopes to proactively retain talents and to build an employer brand internally. By maintaining a good labor-management relationship, we can attract outstanding talents to join Quanta family, and job vacancies are also posted on internal recruitment system for employees who are interested in job rotation. We highly value the rights and interests of our employees, we therefore periodically update the Company’s organizational regulations in line with the amendments to labor laws and regulations. The updated organizational regulations are also disclosed in internal system for all employees to understand and to comply. For overseas subsidiaries, local labor laws and regulations are strictly followed to ensure all employment terms and conditions comply with local laws and regulations. In sites without labor unions, we periodically hold the labor–management meetings quarterly and have established various communication channels, including the suggestion box, grievance hotline, and complaint email boxes. Employees are encouraged to communicate with the management through these channels. Subsidiary in Shanghai, QSMC, has its own labor unions and has signed a collective agreement, wage collective bargaining agreement, and female employee collective agreement with the labor union on April 25, 2019 in order to protect the rights of labor and management, to enhance work efficiency, and establish labor–management harmony. In addition, the protection of occupational health and safety is specified in writing in the agreement. Aside from job related care programs, the Company also provides employees with additional services and programs including:

‧ Food and beverage services: employee cafeteria is available to provide employees with nutritional, tasty, and healthy diet choices.

‧ Recreational facilities: we offer on-site gym, gymnasium, karaoke rooms, and reading rooms for employees to have a balanced work life and the facility is also provided for club activities.

‧ Recreational activities and entertainments: for better balance of work and health, the Company periodically organizes family activities, talks on health care and lifestyle, sports competition, music and art performances.

- 48 -

3. Employee Code of Conduct and Ethics

“Work Procedures” is well established, specific regulations on employee code of conduct or ethics are clearly defined under the “service procedures” section, summaries are as follows:

‧ Employees of Quanta Computer shall devote and dedicate to their jobs. Obey all rules and regulations set out by the Company and follow leadership of the management team of all levels. Management team of all levels shall genuinely provide leadership and role model examples for employees and sincerely accept their constructive suggestions on job improvement.

‧ Under no circumstances shall employees of Quanta Computer seek interests of their own or others by exploiting their job positions, nor shall they accept rebates, improper offerings, entertainments, or other forms of undue advantages.

4. Investor Relations

The Company has established spokesperson and investor relations department to serve as the coordinator between the Company and investors. The investor relations department routinely engages in face-to-face meetings or conference calls with local and foreign investors as well as research analysts to actively address investors’ concerns and interests in the Company. Through active communication with the investment community, the investor relations department assists the community to gain better understanding of the Company’s visions and strategic directions of the management team. Furthermore, the management team holds quarterly press conferences, investor conferences, or conference calls to announce and present financial performance of the Company to the media and worldwide investors at the same time.

In addition, senior executive officers participate in large investor forums and roadshows periodically to meet with global investors. Quanta Computer endeavors to keep investors up to date with accurate, real-time, and transparent business operation and financial information of the Company. All relevant documents and information are timely uploaded to our Corporate website in accordance with regulations governed by competent authorities. Aside from setting up a designated email account to communicate with investors, we also proactively and timely deliver information regarding major business activities and important matters to the investment community via email and such information is also timely disclosed on MOPS (http://mops.twse.com.tw/mops/web/index) and the Corporate website (http://www.quantatw.com). When matters are critical and urgent, the Company would determine the importance of the matter to host press conferences or distribute press releases to comprehensively and intravenously update the investment community.

5. Status of Liability Insurance Coverage for Directors

Liability insurance coverage were purchased for Directors during their terms and management team based on their scope of business to reduce and disperse the risk of significant damage caused to the Company and shareholders resulting from management mistakes or negligence. Renewal of insurance policy for Directors and key personnel is reported to the latest Board meeting.

6. Continuing Education of Directors

The Company’s Directors all have professional background and most of them remain active in their fields. Directors of the Company also participate in continuing education programs and acquire relevant certificates to comply with the “Directions for The Implementation of Continuing Education for Directors and Supervisors of TWSE Listed and TPEx Listed Companies”.

Independent Director: Dr. Wei-Ta Pan

Date Organizer Course

2021/03/02 Center for Corporate Sustainability, CCS

Enhancing ESG effectiveness – Discussions on Corporate Sustainability (3 hours)

2021/01/05 Center of Corporate Sustainability, CCS

2020 Taiwan Sustainable Finance Forum – Building Sustainable Finance Ecosystem (3 hours)

2020/07/02 Securities and Futures Institute A Study on the Practice of Anti-Money Laundering and Countering of Financing Terrorism (3 hours)

2020/07/15 Independent Director Association Taiwan

Corporate Growth, Reorganization or Transformation Post The Pandemics – A Case Study and Discussion (3 hours)


- 49 -

2019/03/15 Taiwan Corporate Governance Association

Key Information From Annual Reports and Analysis of Responsibilities – From the Perspective of Directors and Supervisors (3 hours)


Directors’ Responsibility and Risk Management Under The Latest Corporate Governance Blueprint (3 hours)

2018/04/18 Taiwan Securities Association Enhancing Operational Performance with Big Data Analysis for Enterprises (3 hours)

2018/03/22 Chinese National Association of Industry and Commerce, Taiwan

Case Study on Major Economic Crime and Related Legal Liabilities (3 hours)

Independent Director: Dr. Pisin Chen



How to Leverage Impact Investing to Increase Corporate Value (3 hours)

2020/10/23 TWSE 2020 Corporate Governance and Anti-Corruption Seminar (3 hours)

2019/10/25 Taiwan Insurance Institute “Keynote for Directors and Supervisors, including Independent Directors, and Internal Audit Officers (The 13th Session, 2019): Insurance for Information Security and Corporate Governance: From the Perspective of Sustainability in Financial Industry” (3 hours)

2019/05/07 TWSE Forum on Promoting “Task Force on Climate-Related Financial Disclosures (TCFD)” (3 hours)

2018/12/19 Securities and Futures Institute Interpreting Financial Statements for Directors and Supervisors (3 hours)

2018/10/26 Securities and Futures Institute 2018 Insider Trading Prevention Seminar (3 hours)

Independent Director: Hung Ching Lee



Financial Reports Auditing and Insider Trading Prevention For Directors (3 hours)

2020/09/22 TWSE Seminar on Corporate Governance 3.0 – Blueprint of Corporate Sustainability For Listed Companies (3 hours)


AML and CFT: A Focus of Anti-Money Laundering and Countering of Financing Terrorism (3 hours)


Investigating Important Issues in Insider Trading and Market Manipulation through the OBI Pharma Case (3 hours)


Responsibilities of Directors and Supervisors in Corporate Mergers and Acquisitions (3 hours)


Introduction to Legal Accountability on Commercial Contracts for Corporate Mergers and Acquisitions (3 hours)

- 50 -

7. Management team and related personnel participating in continuing education and training in corporate governance-related courses:

SVP & CFO: Elton Yang


2020/09/10-2020/09/11

Accounting Research and Development Foundation

Continuing Education Courses for Chief Accounting Officers of Issuers, Securities Companies, and Stock Exchanges (12 hours) Accounting and Valuation Methods Post Corporate Mergers and

Acquisitions: A Case Study Legal Responsibility and Case Study on Corporate Insider Short

Swing Trading Analysis of The Latest IFRS Q&A and Common Shortfall The Latest Development Trend on Corporate Governance and

Performance Evaluation

2019/07/25- 2019/07/26


Continuing Education Courses for Chief Accounting Officers of Issuers, Securities Companies, and Stock Exchanges (12 hours) Analysis of The Latest IFRS Q&A Legal Responsibilities and Practice of “Insider Trading” in the

Securities Market from the Judicial and Adjudicative Viewpoints: A Case Study

Strategies, Methods, and Practices of Value Realization of Corporate Mergers and Acquisitions: A Case Study

Issues on International Tax Trends and Countermeasures

2018/09/20-2018/09/21


Continuing Education Course for Accounting Officers of Issuers, Securities Companies, and Stock Exchanges (12 hours) Development Trends and Enterprise Response to FinTech Corporate Governance Practice: Latest Amendments of the

Company Act and Practical Enterprise Responses Financial and Tax Challenges and Practical Responses of Global

Anti-Tax Evasion Against Enterprises Legal Liabilities and Case Studies of Commercial Paper Use of

Enterprises

Internal Audit Officer: Tracy Li


2020/04/28- 2020/04/29

Securities and Futures Institute

Practical Training for Novice Directors and Supervisors, including Independent Directors, and Internal Audit Officers (12 hours): ‧ Skills of Reading Financial Statement for Directors and

Supervisors ‧ Exercising Duties of Directors and Supervisors for Listed

Companies and OTC Companies ‧ Legal Issues That Directors and Supervisors of Public Companies

Should Pay Attention To ‧ The Operation of Corporate Governance and Board of Directors

2020/04/22 Securities and Futures Institute

Issues on Human Resources Management and Business Integration in the Process of Corporate Mergers and Acquisitions (3 hours)

2019/08/07 Securities and Futures Institute

2019 Seminar on Legal Compliance of Insider Share Trading For Listed Companies and Unlisted Public Companies (3 hours)

8. Qualifications and Continuing Education for Employees Responsible for Company’s Financial Information

Transparency as Designated by Competent Authorities:

The Company’s accounting officers are hired as per the “Regulations Governing the Qualification Requirements and Professional Development of Principal Accounting Officers of Issuers, Securities Firms, and Securities Exchanges”. The Company’s accounting officers take a minimum of 12 hours of professional training courses every year in accounting, auditing, finance, financial laws, corporate governance, ethical practices, and legal liabilities. All courses taken are reported back to the competent authorities by law.

- 51 -

The appointment and dismissal of Chief auditor and auditors are conducted in accordance with the Company's recruitment (appointment) regulations and relevant laws and regulations, and all internal auditors are qualified to practice. Their appointment, dismissal, evaluation, salary and compensation assessment are performed once a year and are signed by the Chief auditor and submitted to the Chairman for approval. The appointment or dismissal of the internal Chief auditor must be approved by the Audit Committee and submitted to the Board of Directors for resolution. The Chief auditor is required to take continuing education courses and their status of continuous education is also reported back to the competent authorities by law. Continuing education courses taken are summarized as follows:

Chief Auditor: Pei-Ming Chen

Course Date Organizer Course

2020/09/16 The Institute of Internal Auditors-Chinese

IT Auditing and Case Study (6 hours)


Operational Practice Post Execution of the Company Act and Analysis of The Latest Explanation Letter (6 hours)


Practical Study on Auditing the Cost and Value of Companies (6 hours)


Reading, Analyzing, and Usage of Financial Statements (6 hours)


Power BI (II) Visualized Risk Dashboard Design and Analysis (6 hours)


Power BI (I) Multiple Data Import and Cross-Table Data Analysis (6 hours)

- 52 -

(4) Operation of Remuneration Committee i. Profile of Remuneration Committee Members

The Remuneration Committee has three seats, convened and chaired by Dr. Wei-Ta Pan.

Title

Criteria Name

Meets One of the Following Professional Qualifications Requirements, Together with

at Least Five Years’ Work Experience Independence Criteria*

Number of other Public Companies in Which the Individual is Concurrently Serving as an Remuneration Committee Member

R

emar

ks

An

Inst

ruct

or

or H

igh

er P

osi

tio

n in

a D

epar

tmen

t

of

Co

mm

erce

, Law

, Fin

ance

, Acc

ou

nti

ng

or

Oth

er

Aca

dem

ic D

epar

tmen

t R

elat

ed t

o th

e B

usi

ness

N

eed

s o

f th

e C

om

pan

y in

a P

ublic

or

Pri

vate

Ju

nio

r C

olle

ge, C

olle

ge o

r U

niv

ersi

ty

A J

ud

ge, P

ub

lic P

rose

cuto

r, A

tto

rney

, Cer

tifi

ed

Pu

blic

Acc

ou

ntan

t, o

r O

ther

Pro

fess

ion

al o

r Te

chn

ical

Spe

cial

ists

Wh

o H

as P

asse

d a

Nat

ion

al

Exam

inat

ion

an

d B

een

Aw

arde

d a

Cer

tifi

cate

in a

P

rofe

ssio

n N

eces

sary

for

the

Bu

sin

ess

of

the

Co

mp

any

Hav

e W

ork

Exp

erie

nce

in C

om

mer

ce, L

aw,

Fin

ance

, A

cco

un

tin

g o

r O

ther

wis

e N

eces

sary

fo

r th

e B

usi

nes

s o

f th

e C

om

pan

y

1 2 3 4 5 6 7 8 9 10

Chairman Dr. Wei-Ta

Pan ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 1 note 11

Member Samuel Lee ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 0 -

Member Hung Ching

Lee ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 1 note 12

Note: Please tick the corresponding boxes that apply to a member during the two years prior to being elected or during the term(s) of office. 1. Not an employee of the Company or its affiliates. 2. Not a Director or supervisor of the Company or any of its affiliates. Not applicable in case where the person is

an independent Director of the Company, its parent company, a subsidiary, or any subsidiary under the same parent company, as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary.

3. Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings.

4. Not a management personnel of the persons listed in the first preceding subparagraph, or a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship of any of the persons listed in the preceding three subparagraphs.

5. Not a Director, supervisor, or employee of a corporate shareholder that directly holds five percent or more of the total number of issued shares of the Company, or that ranks among the top five in shareholdings, or that designates its representative to serve as a Director or supervisor of the Company under Article 27, paragraph 1 or 2 of the Company Act. Not applicable to independent Directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.

6. Not a Director, supervisor, or employee of any other company that the majority of the company's Director seats or voting shares are controlled by the same person. Not applicable to independent Directors appointed

- 53 -

in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.

7. Not a Director (or governor), supervisor, or employee of another company or institution that the chairperson, general manager, or person holding an equivalent position of the company are the same person or are spouses. Not applicable to independent Directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.

8. Not a Director, supervisor, officer, or shareholder holding five percent or more of the shares, of a specified company or institution that has a financial or business relationship with the Company. Not applicable to independent Directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent, if the specified company or institution holds 20 percent or more and no more than 50 percent of the total number of issued shares of the public company.

9. Not a professional individual who, or an owner, partner, Director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides auditing services to the Company or any affiliate of the Company, or that provides commercial, legal, financial, accounting or related services to the Company or any affiliate of the Company for which the provider in the past 2 years has received cumulative compensation exceeding NT$500,000, or a spouse thereof; provided, this restriction does not apply to a member of the Remuneration Committee, public tender offer review committee, or special committee for merger/consolidation and acquisition, who exercises powers pursuant to the Act or to the Business Mergers and Acquisitions Act or related laws or regulations.

10. Not been a person of any conditions defined in Article 30 of the Company Act. 11. Dr. Wei-Ta Pan concurrently served as remuneration committee member at SinoPac Holdings. 12. Mr. Hung Ching Lee concurrently served as Chair of the remuneration committee at Roo Hsing Co., Ltd.

ii. Attendance of Members of the Remuneration Committee Meetings

A. The Remuneration Committee held three committee meetings (A) in the previous years, and the attendance of members is tabulated below:

Title Name Attendance

in Person (B)

Attendances Through Proxy

Attendance Rate (%) [B/A]

Remarks

Chairman Dr. Wei-Ta Pan 3 0 100 Re-appointed on 2019/7/12

Member Samuel Lee 3 0 100 Re-appointed on 2019/7/12

Member Hung Ching Lee 3 0 100 Newly appointed on 2019/07/12

Additional Disclosure: (1) The date of the meeting, session, content of the motion, resolutions resolved by the

BoD, and the Company’s response to the remuneration committee’s opinion shall be specified should the BoD declines to adopt or choose to modify suggestions proposed by the remuneration committee: NA.

(2) Should the remuneration committee expressed objections or reservations on the committee’s resolutions, the date of the meeting, session, content of the motion, all members’ opinions and the response to members’ opinion should be specified: NA.

B. Establishment of the “Remuneration Committee Charter”

On August 31, 2011, the BoD approved the “Remuneration Committee Charter” in accordance with relevant regulations. Tenure for the Committee is the same as that of the Board of Directors.

C. The Remuneration Committee member is composed of three members, including Dr.

Wei-Ta Pan, Mr. Samuel Lee, and Mr. Hung Ching Lee. While, Dr. Wei-Ta Pan was elected to convene the Committee and served as the Chair of Committee meetings. The

- 54 -

Committee shall exercise the due care of a good administrator to faithfully perform the following duties and present its recommendations to the Board of Directors for discussion: ‧ Establish and periodically review the performance evaluation and the policies,

systems, standards, and structure for the remuneration for Directors and management personnel.

‧ Periodically assess and determine the remuneration and compensation of Directors and management personnel.

D. The 1st Remuneration Committee was established on September 30, 2011 and three terms have passed since. The 4th committee was appointed to accompany the newly elected BoD on July 12, 2019. The tenure is for three years from July 12, 2019 to June 20, 2022, the same termination date as the end of the BoD term. A total of three committee meetings were held in FY2020.

iii. Major Resolution Resolved by The Remuneration Committee Meeting:

Date of Resolution

Committee Term

Session Summary of Resolution Opinions Expressed by The Committee Members and

Company’s Response

2020/03/19 4 3 Approved the distribution plan for FY2019 employees’ bonus and remuneration to Directors

Approved by all committee members unanimously.

2020/08/03 4 4

Approved the detailed distribution plan for FY2019 employees’ bonus and remuneration to Directors

2020/12/11 4 5 Approved the distribution plan for FY2020 year-end bonus for employees

- 55 -

(5) Fulfillment of CSR and Deviations from the "Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies"

Evaluation Item

Implementation Status Deviations and the cause(s) of deviations

from the Corporate Social Responsibility

Best Practice Principles for TWSE/TPEx Listed

Companies

Yes No Abstract Explanation

1. Does the company assess ESG risks associated with its operations based on the principle of materiality, and establish related risk management policies or strategies?

✓ The Company has established the "Risk Management Guidelines" and approved by the Board of Directors on December 22, 2020 as the guiding principles for risk management. The Company reported its risk management operations for the year in the same period to facilitate the identification, analysis, evaluation and control of operational risks. The Board of Directors is responsible for establishing and overseeing the risk management structure of the Consolidated Companies. The President is responsible for the development and control of the Consolidated Companies’ risk management policies and reports regularly to the Board of Directors on its operations. The Company has established social responsibility handbook based on the Social Accountability 8000 Standard (SA8000) and the Responsible Business Alliance (RBA) Code of Conduct to provide a dependable reference for all CSR related procedures in order to execute the Company’s corporate social responsibilities for all stakeholders. Operation risks are assessed every year according to the principle of materiality, and CSR objectives and strategies are established with respect to the risk level and implemented at all functional units and personnel based on their duties, and evaluation is performed to ensure continual ESG improvement. CSR related training and awareness education are arranged every year through new employee training, announcements, publicity materials, various communication meetings, classroom training, and online training.

No significant difference

- 56 -

Evaluation Item




Companies


Please refer to the following link for more details: https://www.quantatw.com/Quanta/english/csr/contact_sc.aspx

2. Does the company establish

exclusively (or concurrently) dedicated first-line managers authorized by the board to be in charge of proposing the corporate social responsibility policies and reporting to the board?

✓ The high level management team from the Office of the Chairman and the Office of the President have assigned executive officers as the representative and their deputy in accordance with the “Social Responsibility Management Handbook”. Subjects related to the assessment and strategic directions of CSR implementation from the aspects of economy, environment, and society are discussed and initiated by the Company’s CSR Committee. The Committee meetings are held at least twice every year. Proposals of the following year’s CSR strategic direction and progress reports on Committee execution results from the previous year are submitted to BoD for review upon approval from high-level management team from the Office of the Chairman and President. The Strategic Direction of Corporate Social Responsibility (CSR) for FY2020 and the evaluation results and improvement plans for labor and business ethics for FY2019 were reported and approved at the Board Meeting held on December 19, 2019. The strategic direction of CSR for FY2021 and the implementation of CSR operations for FY2020 are the promotion of corporate ethics, including evaluation results and improvement plans for labor and business ethics. Both were reported and approved at the Board Meeting held on December 22, 2020. Please refer to item 7 on “other important information to facilitate better understanding of the Company’s corporate social responsibility practices” as well as the




- 57 -

Evaluation Item




Companies


supplemental material for details regarding our initiative and implementation on Corporate Social Responsibility Governance. Details can also be found on our Corporate Website at https://www.quantatw.com/Quanta/english/csr/csr.aspx

3. Environmental Issues:

(1) Does the company establish proper environmental management systems based on the characteristics of its industry?

✓ The Company has been implementing the environmental management system since 1999, the system combines both environmental management program and actual operations of manufactories. The system is ISO-14001 and ISO-45001 certified, and each manufactory is progressively completing ISO-14064 certification. We also perform internal and external audits on all manufactories to ensure compliance of every standard, to continuously improve our system to meet the regulatory requirements, and to adjust our environmental policy and objectives accordingly. For details regarding the environment-related issues, please visit the “Love The Earth” chapter in our CSR Report or visit: https://www.quantatw.com/Quanta/english/csr/CSR2019/content/e.html


(2) Does the company endeavor to utilize all resources more efficiently and use reusable materials which have a low impact on the environment?

✓ The Company’s environmental policy is “to reduce air pollution, water pollution and waste in order to minimize environmental impacts.” To pursue “sustainable development,” the Company is dedicated in using materials in conformance with the requirements for toxic substances, regulated by global RoHS, EU Battery Directive, EU Packaging and Packaging Waste Directive, and EU REACH. The Company is also dedicated in managing air quality, water pollution,

https://www.quantatw.com/Quanta/english/csr/csr.aspx

https://www.quantatw.com/Quanta/english/csr/csr.aspx

https://www.quantatw.com/Quanta/english/csr/CSR2019/content/e.html


- 58 -

Evaluation Item




Companies


and waste management of our manufacturing sites to comply with local regulations on pollution prevention. In design and development of green products, we are committed to making full use of all forms of energy and resources in conformity of our 3R target - Reduce, Reuse, and Recycle. The Company makes constant efforts to promote and implement efficient energy and resources utilization through green product design to enhance the Company’s green image and to reduce environmental impacts. Green product design would create a win-win situation for the economy and the environment. For details regarding the environment-related issues, please visit the “Green Supply” chapter in our CSR Report or visit: https://www.quantatw.com/Quanta/english/csr/CSR2019/content/f.html

(3) Does the company evaluate the potential risks and opportunities in climate change with regard to the present and future of its business, and take appropriate action to counter climate change issues?

✓ The Company has been following the standard procedures of ISO-14064 since 2007 to inventory the “direct GHG emissions,” “energy indirect GHG emissions,” and “other indirect GHG emissions” at all of our manufactories. We have also established standard procedures for GHG inventory to verify emission level, to fully capture GHG status and to verify the performance of GHG reduction. This subject is also included in key evaluation and controlling matter of the Company’s operation. Please visit the “GHG Management” section of “Love The Earth” chapter in our CSR Report.

https://www.quantatw.com/Quanta/english/csr/CSR2019/content/f.html


- 59 -

Evaluation Item




Companies


(4) Does the company take inventory of its greenhouse gas emissions, water consumption, and total weight of waste in the last two years, and implement policies on energy efficiency and carbon dioxide reduction, greenhouse gas reduction, water reduction, or waste management?

The Company will make the following efforts based on our GHG management policy:

‧ Take internal GHG inventory to understand the status of GHG emissions timely.

‧ Draw up GHG voluntary reduction plans according to GHG inventory results.

‧ Constantly implement and support energy conservation and carbon reduction measures and sustainable operations to fulfill CSR roles and duties.

‧ Comply with environmental protection laws and regulations governed by the government, as well as customer requirements, and other related regulations.

“Reduce air and water pollution and waste production in order to reduce environmental impacts” is our environmental policy. Upholding the belief in “co-existence with Earth,” all employees are committed to achieving the environmental policy with all efforts to prevent pollution and maintain continual improvement. Please visit the “Effluents and Waste” section of “Love The Earth” chapter in our CSR Report.

4. Social Issues: (1) Does the company formulate

appropriate management policies and procedures in accordance with the relevant laws and International Bill of Human Rights?

✓

As a member of the RBA (Responsible Business Alliance), we are committed to abiding by SA8000, the RBA Code of Conduct, relevant international governance, as well as local laws and regulations of host countries and regions. We support and respect international protocols governing human rights for labors, including the International Labour Organization Tripartite Declaration of Principles. In employee management, apart from abiding by relevant laws, regulations

No significant difference.

- 60 -

Evaluation Item




Companies


and the employment contract, the Company also has established relevant regulations as a governing reference for employees. Labor relations department is established to build a sound communication channel with employees. Related procedures are implemented in accordance with the Company’s regulations and procedures. Please visit the “Employee Overview” section of “Human-Centric” chapter in our CSR Report or visit: https://www.quantatw.com/Quanta/english/csr/CSR2019/content/d.html

(2) Does the company have

reasonable employee benefit measures (including salaries, leave, and other benefits), and do business performance or results reflect on employee salaries?

✓ The Company has established a fair remuneration policy based on employees’ education, professional experience, competencies, performance evaluation, and the status of business operations. Remuneration is fairly awarded to ensure remuneration policy is in conformity with the Company’s strategic goals and stakeholders’ interests. Regulations governing employee vacation days and employee welfare are implemented and the establishment of “Employee Welfare Committee” is responsible for executing various employee welfare program. CSR objectives are achieved by implementing the functions and duties of all functional units and personnel. Corresponding development counter acts are effectively measured based on evaluation performance. Details on employee welfare program and implementation are specified in the “Labor Relations” section of the “Business Activities” chapter of this annual report, as well as the “Human Centric” chapter in our CSR Report.

https://www.quantatw.com/Quanta/english/csr/CSR2019/content/d.html

https://www.quantatw.com/Quanta/english/csr/CSR2019/content/d.html

- 61 -

Evaluation Item




Companies


(3) Does the company provide employees with a safe and healthy working environment and organize training on safety and health for employees on a regular basis?

✓ To provide employees with safe and healthy work environment and living conditions, the Company has established the Environment, Health, and Safety (EHS) policy as the guideline for work environment safety and personal safety of employees. Apart from abiding by relevant laws and regulations, we devote additional efforts in fulfilling corporate responsibility.

Specific measures are as follows:

‧ Dedicated Medical Care Center: all sites are equipped with an on-site medical care center with health care professionals on duty to keep track of employees’ health at all times. We further provide employees with periodic health examinations conducted by well-established professional healthcare organizations in Taiwan and keep track of any abnormal health conditions. On-site medical care personnel are on duty to organize health education seminars, health awareness forums, and hygiene education. Implementation of occupational injuries and diseases prevention, as well as health consultation to prevent occupational injuries and to enforce employee health management.

‧ Implementation of OSH Education and Training: new hires and all current employees are fully educated on OSH subjects. Additional OSH training courses are also implemented, including workplace safety management, first aid training, safety and health education, OSH training for direct and indirect labors to effectively reduce occupational injuries and thereby ensure occupational safety.

‧ All manufacturing sites are equipped with Automated External

- 62 -

Evaluation Item




Companies


Defibrillators (AED) and provide trainings on AED operation and CPR.

‧ Periodic Drills on Fire, Emergency Evacuation, and Fire Safety Inspection: periodic inspection of various safety measures and equipment are performed. In addition, the Company also implements fire prevention planning, organizes fire prevention task force, and performs usage drills on fire equipment. Moreover, the Company complies with relevant law to execute implementation of self-guard fire prevention task force, fire reporting training, emergency evacuation drills, emergency rescue training, and fire safety talks to enforce disaster prevention.

For specific measures please refer to the “Occupational Health & Safety Management” section of “Love The Earth” chapter in our CSR Report or visit: https://www.quantatw.com/Quanta/english/csr/CSR2019/content/e.html

(4) Does the company provide its employees with career development and training sessions?

✓ The management team of Quanta extremely value the importance of talent cultivation, especially in areas of Technology, Behavior, and Business (TBB). We therefore entrust Quanta Elite school to organize courses in five areas — Expertise, Leadership, Innovation, Thinking, and Entrepreneurship (ELITE) — to provide comprehensive learning resources that is complete and systematic. Annual learning and development plan is organized based on the organizational strategy and business needs at the beginning of each year. The ELITE program is aim at cultivating employees’ capability in TBB and to assist employees with future career advancement.



- 63 -

Evaluation Item




Companies


For specific measures, please refer to the “Talent Development” section of the “Human-Centric” chapter in our CSR Report.

(5) Do the company's products and

services comply with relevant laws and international standards in relation to customer health and safety, customer privacy, and marketing and labeling of products and services, and are relevant consumer protection and grievance procedure policies implemented?

✓ Quanta’s key business operation is manufacturing, therefore, compulsory rating labels are marked on aluminum boards once product design and production have satisfied with relevant requirements. Products manufactured by Quanta also comply with the regulations on electrical safety, EMI, and EMC. Marking and labeling of all products and services provided by Quanta are governed by relevant regulations to ensure compliance with legal requirements, international standards, local laws and regulations, and to ensure personal data protection is fulfilled. For specific measures, please refer to the “Green Quality Management” section of the “Green Supply” chapter in our CSR Report or visit https://www.quantatw.com/Quanta/english/csr/CSR2019/content/f.html

(6) Does the company implement supplier management policies, requiring suppliers to observe relevant regulations on environmental protection, occupational health and safety, or labor and human rights? If so, describe the results.

✓ As a member of the RBA, we are committed to comply with the RBA Code of Conduct in product design, manufacturing, marketing, and after sales services for customers. “Statement of Compliance with the RBA Code of Conduct” is established in our CSR requirements for suppliers with hopes that suppliers would actively follow our CSR governance. In the event that suppliers violate our CSR requirements and cause significant impacts, the Company may terminate or rescind all contracts signed. For specific measures, please refer to the “Green Supply Management”



- 64 -

Evaluation Item




Companies


section of the “Green Supply” chapter in our CSR Report.

5. Does the company reference internationally accepted reporting standards or guidelines, and prepare reports that disclose non-financial information of the company, such as corporate social responsibility reports? Do the reports above obtain assurance from a third party verification unit?

✓

We publish CSR reports every year since year 2010, the content of our CSR reports are available both in Traditional Chinese and English and the reports are published on the Corporate website electronically at https://www.quantatw.com/Quanta/english/csr/csr_list.aspx in compliance with our environmental protection policy. The reports are also posted on the Market Observation Post System starting since year 2013. The 2019 CSR Report (prepared in 2020) was prepared based on the “Core Level of Disclosure” in accordance with the Sustainable Reporting Guidelines published by the Global Reporting Initiative (GRI). The 2019 CSR Report was submitted for third-party verification based on Type I of AA1000: 2008 High Level Assurance level. Both the CSR Committee and management representatives participated in the verification process. Quanta and the third-party verification agency, Bureau Veritas Certification (Taiwan) Co., Ltd. are two independent entities. Reference for the Company’s disclosure indicators and the independent statement of assurance are available for reference in our CSR Report.


6. If the company has established its Corporate Social Responsibility Best Practice Principles based on the “Corporate

Social Responsibility Best Practice Principles for TWSE/TPEx-Listed Companies,” please describe any discrepancy between the Principles and their implementation.

The Company has established Corporate Social Responsibility Best Practice Principles and incorporated CSR efforts in our business operation and business development. We further established CSR Committee to promote various CSR activities, to enforce corporate governance, to develop a sustainable green environment, to preserve social welfare, and to reinforce information transparency.



- 65 -

7. Other important information to facilitate better understanding of the company’s corporate social responsibility practices

Specific plans and measures the Company takes in environmental protection, community engagement, social contribution, social services, social welfare, and other CSR-related activities include: To promote the ideology of business operation in “Sustainable Environmental Management”, with approval from the BoD, the Company has allocated a sum of US$28.2 million to invest in green energy related industries in different installments through subsidiaries. The investment in green energy is aimed at reducing environmental impacts from the production process, contributing to environmental protection, and realizing the Company’s commitment in CSR, sustainable development and environmental protection. In addition, the Company has established the Quanta Culture & Education Foundation (QCEF) based on the belief in “equal opportunity to explore culture and to share technology” with the objectives of “Education as a Foundation,” “Art as an Essence,” “Technology as an Instrument,” and “Creativity as a Principle.” The Foundation actively participates in various activities to promote community development and charities through business activities, donations, volunteer services, and other complementary professional services. We later established Quanta Arts Foundation (QAF) and its mission is to act as an empowerment hub of original Taiwanese performing arts, and through the four core strategies of encouraging and promoting creation, technology art, overseas exchange, talent cultivation, towards the vision of upholding heritage, inspire creativity, foster cultural creatives, ushering in a new era of Chinese performance arts. For specific measures and executions, please refer to Social Participation chapter of the CSR report, or visit https://www.quantatw.com/Quanta/english/csr/CSR2019/content/g.html

Note: Item 1: Supplementary notes on our Corporate Social Responsibility Governance:

1. CSR Implementation: The Company has established “Quanta CSR Committee” as the designated unit responsible for promoting CSR initiatives, four sub-committees are subordinate to the Quanta CSR Committee, including Corporate Management and Ethics Committee, Environmental Protection Committee, Green Product Committee, and Social Participation Committee. The four sub-committees complete the structure of Quanta CSR Committee. Relevant high-level management team serves as representatives for CSR management, and the human resources team and CSR team are responsible for coordinating the operations and reports of CSR system. Each sub-committee periodically holds committee meeting every six months in order to review the implementation results and follow-up execution plans. Additionally, the "Quanta CSR Committee" Joint Meetings are held to provide a comprehensive review and discussion and to strengthen the promotion of ESG with expectation to meet global ESG standards.

https://www.quantatw.com/Quanta/english/csr/CSR2019/content/g.html

- 66 -

Functions and key responsibilities of each sub-committee under the Quanta CSR Committee are shown below:

(6) Fulfillment of Ethical Corporate Management and Deviations from the "Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies"

Evaluation Item


deviations from the Ethical Corporate Management Best Practice Principles

for TWSE/TPEx Listed Companies


1. Establishment of Ethical Corporate Management Policies and Programs (1) Does the company have a Board-

approved ethical corporate management policy and stated in its regulations and external correspondence the ethical corporate management policy and practices, as well as the active commitment of the Board of Directors and management towards enforcement of such policy?

✓

The Company has established the “Ethical Corporate Management Best Practice Principles,” “Corporate Governance Best Practice Principles,” and the “Code of Ethics and Business Conduct” to regulate relevant business operations. The governance is in effect upon approval from the BoD.


Steering Committee

Sub- Committees

Roles & Responsib il ities

Quanta CSR Committee

Corporate Management &

Ethics Committee

Environmental Protection Committee

Green Product Committee

Social Participation Committee

Management Representative

*Rules and Regulations *Internal Control System *Business Code of Conduct *Employees’ Rights

*Shareholders’ Interests

*EHS Integration *EHS Implementation *Carbon decrease/Energy/

Conservation

*Resources Recycling

*Green Product Design *Manufacturing *Procurement

*Suppliers Management

*Cultural and Educational Events

*Charity Promotion *Care for Minority

*Community Relations

Responsible for company-wide CSR and sustainable

development objectives and directions, regularly reviews

performance and goals by semi-annual board meetings.

- 67 -

Evaluation Item





To prevent insider trading, the Company has established “Internal Material Information Processing Procedure” and “Regulations for Preventing and Controlling Insider Trading.” Designated personnel is assigned to send emails to all insiders in the beginning of every month as reminders to report changes in shareholding status on a periodic basis, summaries of important regulations and attachments of relevant documentations are also enclosed in emails for reference. When there is a newly appointed insider, a designated personnel is assigned to provide necessary education and training and designated department is also established to provide necessary counseling services.

(2) Does the company have mechanisms in

place to assess the risk of unethical conduct, and perform regular analysis and assessment of business activities with higher risk of unethical conduct within the scope of business? Does the company implement programs to prevent unethical conduct based on the above and ensure the programs cover at least the matters described in Paragraph 2, Article 7 of the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies?

✓ The Company has established the “Ethical Corporate Management Best Practice Principles,” “The Code of Ethics and Business Conduct,” “Governance on Approval Authority”, “Avoidance of Conflicts of Interest and Protection of Confidential Information.” For employees to understand and stay vigilant to ethnical corporate management at all times, apart from publishing regulations and documents relating to business ethics in the intranet for employees to access, we publicize the Company’s core values and compliance through education training courses, posters, and publicity materials to enhance value education. The “Code of Ethics and Business Conduct” does not limit itself to governance by laws and regulations, but self-discipline is the key to our compliance and employees should develop self-judgement on their business conducts. When there are

- 68 -

Evaluation Item





doubts about the employee’s business conduct or there are difficulties in determining if the situation conforms with the “Ethical Corporate Management Best Practice Principles,” employees shall distinguish the legitimacy of their conducts as per the “Ethical Corporate Management Best Practice Principles” or consult with the Human Resources department in advance. We uphold zero-tolerance for all potential unethical behavior and punish confirmed offenders with termination of employment or business transactions. Legal actions would also be taken where necessary. Furthermore, the Company has established an accounting system, an internal control system, internal and external audit system to perform periodic and unannounced audits.

(3) Does the company provide clearly the

operating procedures, code of conduct, disciplinary actions, and appeal procedures in the programs against unethical conduct? Does the company enforce the programs above effectively and perform regular reviews and amendments?

✓ The Company has established the “Rules and Procedures for the Board of Directors Meeting” with a system to govern avoidance of conflict of interests for Directors. Under this system, Directors may express their opinions and address enquiries for proposals that constitute conflict of interests against themselves or the institutional investors they represent, but will not participate in the discussion or voting of such proposals. In addition, the Directors shall withdraw themselves from the discussion and voting venues and shall not represent other Directors to exercise their voting rights.

The “Code of Ethics and Business Conduct” governs employees shall maintain high self-discipline and professional ethics in their conduct whether within the Company or outside the Company. Specific governance includes the following:

- 69 -

Evaluation Item





not request for, accept or give any and all forms of bribery;

not engage in any and all forms of behavior that may harm the Company’s goodwill;

avoid any and all forms of events and matters that may constitute conflicts of interest between employees and the Company;

not request for, accept or give any and all forms of gift or treatment/entertainment that may harm their faithfulness to duty or professional judgment.

Relevant business units would review the applicability and legality based on the situation and make necessary amendments.

2. Implementation of Ethical Corporate Management (1) Does the company evaluate business

partners’ ethical records and include ethics-related clauses in business contracts?

✓

As a RBA member, we are committed to abiding by the RBA Code of Conduct and strictly request our suppliers to comply with relevant RBA standards, including but without limitation to business integrity, no bribery, and no improper benefits. Furthermore, we strictly request suppliers to perform the compliance obligation either contractually or non-contractually.


(2) Does the company have a unit responsible for ethical corporate management on a full-time basis under the Board of Directors which reports the ethical corporate management policy and programs against unethical conduct regularly (at least once a year) to the Board of Directors while overseeing such operations?

✓ The Company has formulated an "Ethical Corporate Management Best Practice Principles" and the Company is in compliance with the Responsible Business Alliance (RBA) Code of Conduct. The Board of Directors has established various committees and channels, such as the Audit Committee, the Remuneration Committee, recruitment of financial experts and internal auditors, in order to fulfill the responsibility of monitoring the integrity of management. It has also formulated relevant rules and regulations, and

- 70 -

Evaluation Item





reviews the implementation status regularly (at least once a year).

The promotion and implementation of corporate ethical management is presided over by the Corporate Governance and Ethics Committee, one of the four executive committees under the CSR Committee, which meets at least twice a year and submits the CSR strategic direction for the following year to the Board of Directors for approval and implementation at the end of each year. The most recent two annual reports were filed on December 19, 2019 and December 22, 2020.

(3) Does the company establish policies to

prevent conflicts of interest and provide appropriate communication channels, and implement it?

✓ The Company has established the “Ethical Corporate Management Best Practice Principles” and the “Code of Ethics and Business Conduct” to prevent conflicts of interest. When new employees are recruited, they are requested to sign the “Statement of Conflicts of Interest for New Employees”. In addition, all employees are required to voluntarily report any conflicts of interest. Employees in charge of management duties and nature of their job are requested to report conflicts of interest or any threats thereof every year. The Company has also established the “Rules and Procedures for the Board of Directors Meeting” with a system to govern avoidance of conflict of interests for Directors. Under this system, Directors may express their opinions and address enquiries for proposals that constitute conflict of interests against themselves or the institutional investors they represent, but will not participate in the discussion or voting of such proposals. In addition, the Directors shall withdraw themselves from the discussion and voting venues and

- 71 -

Evaluation Item





shall not represent other Directors to exercise their voting rights.

(4) Does the company have effective

accounting and internal control systems in place to implement ethical corporate management? Does the internal audit unit follow the results of unethical conduct risk assessments and devise audit plans to audit the systems accordingly to prevent unethical conduct, or hire outside accountants to perform the audits?

✓ To ensure the correctness and integrity of the financial reporting process and controls, standard operating procedures are designed in relation to internal control systems targeting unethical behavior with potential higher risk of involvement. Internal audit team would also reference the risk assessment results to implemented audit items in the annual audit program. The audit results and subsequent improvement programs are reported to the Board of Directors and management team to enforce the effectiveness of audit. In addition, through the annual self-assessment conducted within the Company, all departments and subsidiaries must review the design of the internal control system and the effectiveness of its implementation. Outside accountants are hired to perform periodic audits.

(5) Does the company regularly hold internal and external educational trainings on operational integrity?

✓ Through different courses in CSR, PIS, green product, and ISO audits, employees are reminded periodically on regulation compliance and ethical corporate management mindset and practices. To respect and to ensure employees understand their rights and interests at work, and that they are familiar with relevant regulations and job responsibilities, the Company organizes education and training courses on human rights at our manufacturing sites in Taiwan, mainland China, and Thailand. Topics of education and training include CSR, prevention of sexual harassment, project management, and counseling. The number of participants and the length of training were 331,861 participants and 129,723 hours

- 72 -

Evaluation Item





respectively. Employees or direct labors in Taiwan, Shanghai & Chongqing sites in mainland China, and Thailand are 100% trained.

3. Operation of The Integrity Channel (1) Does the company establish both a

reward/punishment system and an integrity hotline? Can the accused be reached by an appropriate person for follow-up?

✓

The “Code of Ethics and Business Conduct” specifically governs employees to remain alert on any behavior that may violate the Code of Conduct. When in doubt or when employees discover any behavior violating the Code of Conduct, the employees are responsible for reporting to their supervisors. Employees may also directly report the matters to the human resources manager, the chief auditor, or through the employee grievance channels if necessary. Employees reporting a violation of the Code of Conduct and subsequently participate in related investigations shall be protected by the Company against any unfair treatment or retaliation. Employees breaking the Code of Conduct shall be punished and terminate employment in the most severe circumstance. Other stakeholders with objections or concerns may express their opinions through our CSR contact window.


(2) Does the company establish standard operating procedures for confidential reporting on investigating accusation cases? Does the company have in place standard operating procedures for investigating accusation cases, as well as follow-up actions and relevant post-investigation confidentiality measures?

✓ We have established the protection and non-retaliation mechanism in the code of ethics of our CSR system based on the RBA Code of Conduct. Employees violating the Code of Conduct would be punished and reported in accordance with relevant rules and regulations.

(3) Does the company provide proper whistleblower protection?

✓ Employees reporting a violation of the Code of Conduct and subsequently participate in related investigations are protected by the Company against any unfair treatment or retaliation.

- 73 -

Evaluation Item





4. Reinforcing Information Disclosure Does the company disclose its ethical corporate management policies and the results of its implementation on the company’s website and MOPS?

✓

Information on ethical corporate management, social responsibility, and business philosophy are disclosed on our Corporate website. Designated team is also assigned to collect and publish relevant information. For details, please refer to the “Corporate Governance and Ethics” section of the “Quanta Profile & Corporate Governance” chapter in our CSR Report or Company’s website at https://www.quantatw.com/Quanta/english/csr/csr_list.aspx https://www.quantatw.com/Quanta/english/csr/CSR2019/content/c.html


5. If the company has established its own ethical corporate management best practice policies based on the “Ethical Corporate Management Best Practice Principles for TWSE/TPEx-Listed Companies”, please describe any discrepancy between the Principles and their implementation:

Best practice principles have been established and submitted to the BoD for approval prior to implementation. Such principles are also published on the Corporate website and MOPS as a reference guideline for the management team, employees and suppliers.

6. Other material information that to facilitate better understanding of the company’s ethical corporate management policies (e.g., review and amend its policies) Matters related to significant operation policies, investment projects, acquisition and disposal of assets, lending funds to other parties, and guarantee and endorsement are analyzed, implemented and resolved by relevant departments. Such matters are disclosed in accordance with relevant regulations. We conduct self-assessment every year to review the suitability and effectiveness of the internal control system in response to organizational and environmental changes to ensure our internal control is effectively implemented. Strict mechanism is implemented to evaluate new suppliers with key focuses on suppliers’ environmental protection, business ethics and integrity, and green products policy. CSR audit on suppliers is performed every year based on guidelines resolved by Quanta CSR Governance & Ethical Management Committee. In addition to fulfill the RBA requirements, our expectations and demands for suppliers also include the acceptance of our documentary review and onsite audit, taking corrective and preventive actions for problem identified, and exercise due care to investigate conflict mineral investigations and resolve relevant issues. We expect our suppliers to equally value the importance of CSR practices with Quanta.

(7) Access information on Company’s Corporate Governance Best Practice and related regulations:

Material information regarding business operations is disclosed on the Corporate website at https://www.quantatw.com/Quanta/english/corporategovernance/ruleandinfo.aspx for



https://www.quantatw.com/Quanta/english/csr/CSR2019/content/c.html

https://www.quantatw.com/Quanta/english/csr/CSR2019/content/c.html

https://www.quantatw.com/Quanta/english/corporategovernance/ruleandinfo.aspx

- 74 -

investors and shareholders review. The Corporate Governance section contains financial information and major internal policies, including Articles of Incorporation, Acquisition and Disposal of Assets Procedure, Lending Funds to other Parties and Endorsements & Guarantees, Internal Audit Organization and Operations, Remuneration Committee Charter and Regulations, Regulations for Election of Directors. All disclosed documents are gathered and maintained by designated personnel responsible for disclosing and updating the information periodically so investors would have timely access to our financial information, business operation, and investor conference material.

(8) Other material information that would enhance understanding of the Company’s

implementation of corporate governance:

Related business units regularly or intermittently discuss matters concerning financial statements and internal control status with CPAs.

For internal material information processing procedure, the Company follows “Regulations for Preventing and Controlling Insider Trading”. For material information disclosure, the Company follows “Regulations Governing the Scope of Material Information and the Means of its Public Disclosure Under Article 157-1, Paragraphs 5 and 6 of the Securities and Exchange Act” and the “Taiwan Stock Exchange Corporation Procedures for Verification and Disclosure of Material Information of Companies with Listed Securities”. To prevent insider trading, personnel with knowledge of internal material information shall trade the securities of this Company as per Article 157-1 of the Securities and Exchange Act. Internal mechanisms are also established, awareness education and training are periodically arranged, and such practice is fully informed to employees, management team, and Directors in order to prevent law breaking matters and incidents of insider trading.

- 75 -

(9) Performance of Internal Control i. Statement of Internal Control


Statement of Internal Control 30th March, 2021

With regards to the results of 2020 self-evaluation of the internal control system, we hereby declare the following: 1. We acknowledge and understand that it is the responsibility of our board of Directors and

management team to establish, implement, and maintain an internal control system, and we have established such a system. The purpose is to fairly ensure the effectiveness and efficiency of the Company’s operations, including profitability, performance and security of assets. To provide reliable, timely, and transparent financial reporting that meets legal compliance.

2. Despite limitation inherent to each internal control system, an effective internal control system can only fairly ensure the achievement of aforementioned goals. Furthermore, the effectiveness of an internal control system may vary in response to changes in macro environment and market condition. By equipping our internal control system with a self-monitoring mechanism, immediate corrective actions can be taken against defects once identified.

3. The Company follows procedures specified in the “Regulations Governing the Establishment of Internal Control Systems by Public Companies” (the “Criteria”) to determine the effectiveness of design and implementation of our internal control system. With regard to management control process, the Criteria divides an internal control system into five elements: a) control environment, b) risk assessment, c) control operation, d) information and communication, and e) monitoring. Each element also contains several audit items, and shall be referred to the Criteria for details.

4. We have evaluated the effectiveness of the design and implementation of our internal control system based on aforementioned criteria.

5. Based on the assessment results following aforementioned evaluation criteria, we hold that the design and implementation of our internal control system on December 31, 2020, including supervision and management of subsidiaries, were effective in understanding the effectiveness of operation, progress in achieving above set goals. Our internal control system delivers reliable, timely, and transparent information, and meets compliance governed by relevant regulations.

6. The statement of internal control shall form an integral part of the Company’s annual report and prospects, the statement will also be disclosed to public. If there is any fraud, concealment, or unlawful practice found in the above contents, we shall be liable for legal consequences set forth in Article 20, Article 32, Article 171 and Article 174 of the Securities and Exchange Act.

7. This statement of declaration was approved unanimously by the Board of Directors meeting held on March 30, 2021 with none of the seven attending Directors expressing dissenting opinions.


Chairman of the Company: President of the Company: (Barry Lam)

(C. C. Leung)

- 76 -

If CPA was engaged to conduct a special audit of internal control system, provide its audit report: NA.

(10) Status of the Company or internal personnel being punished for violating regulations governing

internal control system, or major defects and improvements? No significant misconduct identified last year.

(11) Major Resolutions of Shareholders’ Meeting and Board Meetings:

Annual General Meeting of Shareholders

Date Major Resolutions Implementation Status

2020.06.19 Report distribution of employees' bonus and remuneration to Directors

Proceeded as approved.

Approved FY2019 business report and financial statements (including independent auditor’s report and Audit Committee’s review report)

Please refer to financial statements disclosed on Company’s website and MOPS

Approved the allocation of FY2019 distributable earnings

The AGM resolved to distribute stock dividend of NT$0 and cash dividend of NT$3.70 per share. The BoD meeting then set August 9, 2020 as the base date for disposition and August 27, 2020 as the date for cash dividend disposition. All dividends have been distributed as resolved.

Board of Directors Meetings

Date Period Section Summary

2020.01.13 13 8 Approved internal audit report.

Approved cash capital increase subscription of subsidiary, QMB Co., Ltd.

2020.03.30 9 Status report on derivatives transactions from the previous period.

Approved internal audit report.

Evaluation report on the performance of the Board of Directors and the Functional Committee.

Status report on the self-prepared financial reports.

Approved FY2019 financial statements.

Approved independent CPA’s audit report to be issued for FY2019 financial statements.

Approved FY2019 business report.

Approved the effectiveness evaluation and the statement of declaration on the Company’s internal control system.

Approved FY2019 distribution of employees' bonus and remuneration to Directors.

Approved amendments on the Company’s Internal Control System.

Approved matters relating to FY2020 AGM.

Approved donation to the Chinese National Association of Industry and Commerce (CNAIC).

Approved donation to The SINOCON Industrial Standards Foundation.

Ratified credit limit applications from financial institutes.

2020.05.14 10 Approved internal audit report.

Status report on derivatives transactions from the previous period.

Approved Q1 FY2020 financial statements.

Approved independent auditor’s review report to be issued for Q1 FY2020 financial statements.

Approved fund lending to affiliates for working capital needs.

Approved the 2019 CSR report (prepared in 2020).

- 77 -

Board of Directors Meetings

Date Period Section Summary

Approved donation of notebook computers to Quanta Culture & Education Foundation.




Status report on the liability insurance coverage for Directors.

Approved base date for dividend disposition.

Ratified credit limit applications from financial institutes



Approved 1H FY2020 financial statements.

Approved independent auditor’s review report to be issued for 1H FY2020 financial statements.

Approved FY2019 distribution of remuneration to Directors.

Approved FY2019 distribution of remuneration to management team.

Approved donation to Quanta Culture & Education Foundation.

Approved application for syndicated loan from financial institutions.




Approved Q3 FY2020 financial statements.

Approved independent auditor’s review report to be issued for Q3 FY2020 financial statements.

Approved cash capital increase subscription of subsidiary, QMB Co., Ltd.

Approved donation to Quanta Culture & Education Foundation.

Approved donation to Quanta Arts Foundation.



Status report on risk management operation

Status report on the planning and operation of intellectual property rights management

Report on the execution status and improvement plan on listed companies’ capability of self-prepared financial statements.

Approved the proposal of “2021 Annual Audit Plan” for the Company and each subsidiary.

Approved annual assessment of accountants’ independence and professional qualifications.

Approved 2021 CSR Strategy and Direction for the Company, as well as progress report on 2020 CSR operations.

Approved FY2020 distribution of remuneration to management team.

Approved the amendments on “Procedures to Evaluate the Performance of the Board of Directors and Functional Committee”.

Approved the establishment of “Procedures for Risk Management”.


(12) Key content of any Director expressing objections or reservations on BoD resolutions that were

recorded or with written statements: no such objection was reported in the previous year and by the date of the report's publication.

- 78 -

(13) Resignation or discharge of personnel responsible for the Company’s financial reporting: No personnel change of the Company’s Chairman, President, head of accounting department, CFO, chief internal auditor, internal audit officer, and head of R&D department in the previous year and by the date of the report's publication.

4. Information of CPA Audit Fee

(1) Detailed disclosure of audit and non-audit fee and the scope of non-audit service if the amount of non-audit fees paid to a CPA, a CPA firm, and its affiliates exceeds a quarter of the audit fee:

Accounting Firm Name of CPA CPA’s Audit Period Remarks

KPMG Taiwan Wan-Wan Lin Liu-Feng Yang 2020/1/1-2020/12/31 -

Fee Items

Fee Range Audit Fee Non-Audit Fee Total

1 Below NT$2,000,000 - - -

2 NT$2,000,000-NT$3,999,999 - ✓ ✓

3 NT$4,000,000- NT$5,999,999 - - -

4 NT$6,000,000- NT$7,999,999 - - -

5 NT$8,000,000- NT$9,999,999 - - -

6 NT$10,000,000 and above ✓ - ✓

(expressed in NT$ thousand)

Accounting Firm

Name of CPA Audit Fee

Non-Audit Fee CPA’s Audit Period Remarks System

Design Company

Registration Human

Resources Others Subtotal

KPMG Taiwan

Wan-Wan Lin Liu-Feng Yang

10,380 - - - 2,670 2,670 2020/01/01-2020/12/31

Notes

Note 1: Neither CPAs nor the CPA firm have/has been changed this year. Note 2: Audit fee: main services include the audit and certification fees for annual financial statements and

tax reports. Note 3: Non-audit fee: main services include consulting fees for the Master File (MF) and tax.

(2) Detailed disclosure of changes on audit fees in terms of amount, proportion and reasons if change on CPA firm and the audit fees paid for the year of change decreased from the previous year: NA.

(3) Detailed disclosure of audit fees in terms of amount, proportion and reasons if the amount

of audit fees decreased by 15% or more from the previous year: The audit fee was $12,120,000 less compared to the previous year as the audit fee from the previous year includes consulting fees for transfer pricing, Master File (MF) and tax, as well as dual-status business entity to use the direct deduction method of business tax for a total amount of $2,220,000. The aforementioned consulting fees have been reclassified as non-audit fee this year.

5. Information on Change of CPA

To maintain legal compliance and accountant independence and to support the internal rotation system of KPMG Taiwan, the original CPAs, Wan-Wan Lin and Liu-Feng Yang of KPMG Taiwan, were replaced with CPAs Wan-Wan Lin and Tsao-Jen Wu of KPMG Taiwan as of Q1 2021.

- 79 -

6. Chairman, President and/or Management Team in Charge of Finance or Accounting Who Has

Served at CPA Firm(s) or Affiliate(s) In The Previous Year: NA

7. Net Change in Shareholding or Shares Pledged by Directors, Management Team, and Shareholders with 10% Shareholdings or More

(1) Changes in Shareholdings of Directors, Management Team, and Shareholders with 10% Shareholdings or More:

Unit: Shares

Title Name

2020 As of Apr. 20, 2021

Holding Increase

(Decrease)

Pledged Holding Increase

(Decrease)

Holding Increase

(Decrease)

Pledged Holding Increase

(Decrease)

Chairman & Shareholder with

over 10% shareholding

Barry Lam

Vice Chairman & President

C.C. Leung

Director & EVP C.T. Huang


Dr. Wei-Ta Pan


Hung Ching Lee


Dr. Pisin Chen

EVP Alan Tsai

SVP C.S. Yang

SVP Mike Yang

SVP Alan Chai

SVP & CFO Elton Yang

VP Steve Cheng

VP Michelle Hsieh

VP Brand Chang (15,000)

VP J.J. Wei (99,000)

VP Danny Lin 9,159

VP Terrisa Chung

VP Ted Chang

VP W.L. Sung

VP Thomas Tsou

VP James Jau (3,004)

VP Roger Huang

J.C. Tzeng

VP Bruce Wu (11,000) VP Jonny Hsu

VP Peter Hsieh

VP Michael Wu

VP Frank Chuang

VP Robin Chou

VP Vincent Yuan

(appointed on 01/13/2020)

- 80 -

(2) Transfer of Shares: NA (3) Pledge of Shares: NA

Internal Audit Officer

Tracy Li

Shareholders With 10% Shareholdings

or More Chien Yu Investment Co Ltd

Director & SVP Tim Li (resigned on 01/23/2021)

VP Tony Tan (resigned on 03/17/2021)

VP Jimmy Chin (resigned on 12/31/2020)

- 81 -

8. Related Party Relationships Among Top Ten Shareholders As of 04/20/2021 Unit: shares

No. Name

Current Shareholding Spouse’s/minor’s

Shareholding


Arrangement

Name and Relationship Between the Company’s Top Ten Shareholders, or

Spouses or Relatives Within Two Degrees of Kinship

Remarks

Shares % Shares % Shares % Name Relationship

1. Chien Yu Investment Co., Ltd. Chairman: Barry Lam

572,401,374 14.82% - - - - Barry Lam

Barry Lam serves as the Company’s Chairman

-

415,738,138 10.76% 11,157,506 0.29% 4,400,000 0.11%

2. Barry Lam

415,738,138 10.76% 11,157,506 0.29% 4,400,000 0.11% Chien Yu Investment Co., Ltd.

Barry Lam serves as the Company’s Chairman

-

3. Government of Singapore 109,850,441 2.84% - - - - NA - -

4. C.C. Leung

82,645,736 2.14% - - - - Yi Chia Xin Investment

Company Ltd.

C.C. Leung serves as the Company’s Supervisor

5. New Labor Pension Fund 82,390,500 2.13% - - - - NA -

6. He Sa Trust 80,000,000 2.07% - - - - NA -

7. Yi Chia Xin Investment Company Ltd.

63,471,804 1.64% - - - - C.C. Leung C.C. Leung serves as the

Company’s Supervisor

8. Cathay Life Insurance Co., Ltd. Chairman: Tiao-Kuei Huang

63,189,447 1.64% - - - - NA - -

9 Nan Shan Life Insurance Co., Ltd. Chairman: Tang Chen

61,934,000 1.60% - - - - NA - -

10 Xin Ming Investment Company Limited Chairman: Xin Ming Leung

60,577,414 1.57% NA

- 82 -

9. Ownership of Shares in Affiliated Enterprises Unit: thousand shares

Affiliated Enterprises Ownership by the Company

Direct or Indirect Ownership by Directors, Supervisors, Managers

Total Ownership

Shares % Shares % Shares %

QCJ Co., Ltd. - 100.00% - - - 100.00%

Quanta International Ltd. 93,484 100.00% - - 93,484 100.00%

WK Technology Fund VI 10,838 21.43% - - 10,838 21.43%

Quanta Storage Inc. 82,882 29.78% 1,212 0.44% 84,094 30.22%

Quanta Venture Capital Co., Ltd. 100,000 100.00% - - 100,000 100.00%

Quanta Computer Technology Investment Corp. 60,000 100.00% - - 60,000 100.00%

Quanta Micro-System Inc. 17,500 75.19% 5,775 24.81% 23,275 100.00%

RoytalTek Company Ltd. 18,604 36.76% 409 0.81% 19,013 37.57%

Quanta Cloud Technology Inc. 28,200 100.00% - - 28,200 100.00%

EBN Technology Corp. 8,375 25.00% 1,000 2.98% 9,375 27.98%

TechView International Technology Inc. - 42.80% - - - 42.80%

Plentylink Technology Co., Ltd. 3,150 17.50% 3,150 17.50% 6,300 35.00%

THINKTECH COMÉRCIO DE INFORMÁTICA LTDA 94,879 83.16% 19,218 16.84% 114,097 100.00%

Quantum Optoelectronics Inc. 1,750 20.00% 1,750 20.00% 3,500 40.00%

QT Medical, Inc. 1,666 13.13% - - 1,666 13.13%

QMB Co., Ltd. 500,000 100.00% - - 500,000 100.00%

Quanta Cloud Technology Singapore Ptd. Ltd. 1,000 100.00% - - 1,000 100.00%

Cloud River Biomedicine, Inc. 378 8.29% - - 378 8.29%

LIONS Taiwan Technology Inc. 3,241 16.67% - - 3,241 16.67%

- 83 -

IV. Fund Raising

1. Capitals and Shares (1) Sources and Types of Capital

i. Sources and types of capital

Date

Face Value

Per Share

Authorized Capital Paid-In Capital Capital Sources (NT$ Thousand) Capital Stock Offset with Non-Cash

Assets

Others Shares (1,000)

Amount (NT$1,000)

Shares (1,000)

Amount (NT$1,000)

Capital Increase by Cash

Recapitalization of Earnings

Capital Surplus

Recapitalization of

Convertible Bonds

1991.09 10 41,000 410,000 41,000 410,000 85,000 145,000 0 0 NA NA

1993.07 10 50,020 500,200 50,020 500,200 0 90,200 0 0 NA NA

1995.06 10 105,000 1,050,000 105,000 1,050,000 49,600 500,200 0 0 NA NA

1997.06 10 210,000 2,100,000 210,000 2,100,000 105,000 945,000 0 0 NA NA

1998.05 10 1,000,000 10,000,000 428,000 4,280,000 0 2,180,000 0 0 NA NA

1999.05 10 1,500,000 15,000,000 1,158,000 11,580,000 0 7,300,000 0 0 NA NA

1999.06 10 1,500,000 15,000,000 1,159,450 11,594,500 14,500 0 0 0 NA NA

2000.05 10 2,000,000 20,000,000 1,642,000 16,420,000 0 4,825,500 0 0 NA NA

2001.07 10 2,500,000 25,000,000 2,082,500 20,825,000 0 4,405,000 0 0 NA NA

2002.04 10 2,500,000 25,000,000 2,104,520 21,045,201 0 0 0 220,201 NA NA

2002.06 10 2,800,000 28,000,000 2,461,842 24,618,428 0 3,556,780 0 16,447 NA NA

2003.06 10 3,500,000 35,000,000 2,746,027 27,460,271 0 2,841,843 0 0 NA NA

2003.12 10 3,500,000 35,000,000 2,796,027 27,960,271 500,000 0 0 0 NA NA

2004.01 10 3,500,000 35,000,000 2,799,174 27,991,739 0 0 0 31,468 NA NA

2004.05 10 3,500,000 35,000,000 2,799,574 27,995,737 0 0 0 3,998 NA NA

2004.07 10 3,500,000 35,000,000 3,119,503 31,195,029 0 3,199,292 0 0 NA NA

2004.08 10 3,500,000 35,000,000 3,107,250 31,072,499 0 (122,530) 0 0 NA NA

2005.03 10 3,500,000 35,000,000 3,046,970 30,469,699 0 (602,800) 0 0 NA NA

2005.07 10 3,500,000 35,000,000 3,239,318 32,393,184 0 1,923,485 0 0 NA NA

2006.04 10 3,500,000 35,000,000 3,253,598 32,535,984 0 0 0 0 NA Shares exchange 14,280,000 shares

- 84 -

2006.07 10 3,800,000 38,000,000 3,363,008 33,630,080 0 1,047,864 0 0 NA Shares exchange 4,623,000 shares

2007.07 10 4,000,000 40,000,000 3,475,268 34,752,682 0 1,122,602 0 0 NA NA

2008.07 10 4,000,000 40,000,000 3,475,268 36,495,262 0 1,742,580 0 0 NA NA

2009.03 10 4,200,000 42,000,000 3,610,725 36,107,252 0 (388,010) 0 0 NA NA

2009.07 10 4,200,000 42,000,000 3,684,051 36,840,507 0 733,255 0 0 NA NA

2009.10 10 4,200,000 42,000,000 3,725,632 37,256,324 0 0 0 415,817 NA NA

2010.01 10 4,200,000 42,000,000 3,781,976 37,819,761 0 0 0 563,437 NA NA

2010.05 10 4,200,000 42,000,000 3,809,358 38,093,577 0 0 0 173,256 NA Employee stock option/warrant exchange 10,056,000 shares

2010.07 10 4,600,000 46,000,000 3,832,476 38,324,764 0 0 0 224,027 NA Employee stock option/warrant exchange 716,000 shares

2010.11 10 4,600,000 46,000,000 3,832,833 38,328,334 0 0 0 0 NA Employee stock option/warrant exchange 357,000 shares

2011.02 10 4,600,000 46,000,000 3,833,873 38,338,734 0 0 0 0 NA Employee stock option/warrant exchange 1,040,000 shares











- 85 -

Note: Capital increases listed in above table have been approved by the Securities and Futures Commission, Ministry of Finance, as shown in the following approval letters:



1990/12/26 (79) Tai-Cai-Zheng-(1) No. 03552 (retroactive filing for public issuance)

1991/09/02 (80) Tai-Cai-Zheng-(1) No. 02501 (base date of this capital increase was 1991/9/20)

1993/07/15 (82) Tai-Cai-Zheng-(1) No. 30231

1995/06/29 (84) Tai-Cai-Zheng-(1) No. 37781

1997/06/27 (86) Tai-Cai-Zheng-(1) No. 51336

1998/05/02 (87) Tai-Cai-Zheng-(1) No. 37138

1999/05/24 (88) Tai-Cai-Zheng-(1) No. 48522 (base date of this capital increase was 1999/6/20)

1999/06/24 (88) Tai-Cai-Zheng-(1) No. 55504 (subscription base date of this capital increase was 1999/7/31)



2002/04/26 registration change was approved by the Ministry of Economic Affairs

2002/06/18 Tai-Cai-Zheng-1 No. 0910133020, registration change was approved by the Ministry of Economic Affairs on 2002/8/15

2003/06/24 Tai-Cai-Zheng-1 No. 09200127894, base date of new share issuance of this capital increase was 2003/7/19

2003/11/03 Tai-Cai-Zheng-1 No. 0920145116

2003/12/22 registration change was approved by the Ministry of Economic Affairs, base date of this capital increase through GDR issuance was 2003/11/26

2004/01/15 registration change was approved by the Ministry of Economic Affairs, base date of this capital increase was 2003/12/28


2004/07/06 Securities and Futures Bureau, Tai-Cai-Zheng-1 No. 09300129786, base date of this capital increase through new share issuance was 2004/8/7

2004/09/02 registration change was approved by the Ministry of Economic Affairs, including the number of treasury shares bought back, cancellation of capital at NT$122,530,000, capital reduction base date was 2004/8/5.

2005/03/02 registration change was approved by the Ministry of Economic Affairs, including the number of treasury shares bought back, cancellation of capital at NT$602,800,000, capital reduction base date was 2005/2/14

2005/06/24 Securities and Futures Bureau, Jin-Guan-Zheng-1-Zi No. 0940125283, base date of this capital increase through new share issuance was 2005/8/9

2006/04/20 FSC, Jin-Guan-Zheng-1-Zi No. 0950112433, base date of exchange of this share transfer was 2006/4/26

2006/07/06 FSC, Jin-Guan-Zheng-1-Zi No. 0950128939, base date of this capital increase through new share issuance was 2006/8/9

2006/07/14 FSC, Jin-Guan-Zheng-1-Zi No. 0950129207, base date of exchange of this share transfer was 2006/8/2



2009/03/06 registration change was approved by the Ministry of Economic Affairs, including the number of treasury shares bought back, cancellation of capital at NT$388,010,000, capital reduction base date was 2009/2/20

- 86 -

Note 1: Above shares have been publicly offered. Note 2: Unissued stock includes 100 million shares of employee options/warrants. Note 3: No preferred share was issued.




















Share Type Authorized Capital

Remarks Outstanding Shares Unissued Stock Total

Common 3,862,627,432 737,372,568 4,600,000,000 Note

Total 3,862,627,432 737,372,568 4,600,000,000 -

- 87 -

ii. Shelf-Registration: NA. (2) Structure of shareholdings

2021/04/20

Item Government

Agencies Financial

Institutions

Other Institutional

Investors

Foreign Institutions and

Individuals

Domestic Natural Persons

Treasury Stock Total

Number of shareholders

1 64 336 1,189 75,850 0 77,440

Shareholdings 8,750 567,509,133 1,095,242,965 1,191,995,056 1,007,871,528 0 3,862,627,432

Percentage (%) 0.00% 14.69% 28.35% 30.87% 26.09% 0.00% 100.00%

- 88 -

(3) Shareholding Distribution Status 2021/04/20

(4) List of Major Shareholders

2021/04/20

Class of Shareholding Number of

Shareholders Shareholdings Percentage (%)

1 - 999 24,125 4,987,913 0.13%

1,000 - 5,000 42,409 85,882,786 2.23%

5,001 - 10,000 5,750 43,057,231 1.11%

10,001 - 15,000 1,613 20,071,366 0.52%

15,001 - 20,000 876 16,023,080 0.41%

20,001 - 30,000 738 18,705,765 0.48%

30,001 - 40,000 323 11,452,030 0.30%

40,001 - 50,000 227 10,459,525 0.27%

50,001 - 100,000 411 29,851,057 0.77%

100,001 - 200,000 270 38,368,060 0.99%

200,001 - 400,000 197 57,098,203 1.48%

400,001 - 600,000 92 45,283,802 1.17%

600,001 - 800,000 64 44,056,678 1.14%

800,001 - 1,000,000 55 49,988,053 1.29%

1,000,001 and above 290 3,387,341,883 87.71%

Total 77,440 3,862,627,432 100.00%

No. Shareholder’s Name Shareholdings Percentage (%)

1 Chien Yu Investment Co., Ltd. 572,401,374 14.82%

2 Barry Lam 415,738,138 10.76%

3 Government of Singapore 109,850,441 2.84%

4 C.C. Leung 82,645,736 2.14%

5 New Labor Pension Fund 82,390,500 2.13%

6 He Sa Trust 80,000,000 2.07%

7 Yi Chia Xin Investment Company Ltd. 63,471,804 1.64%

8 Cathay Life Insurance Co., Ltd. 63,189,447 1.64%

9 Nan Shan Life Insurance Co., Ltd. 61,934,000 1.60%

10 Xin Ming Investment Company Limited 60,577,414 1.57%

- 89 -

(5) Market Price, Net Worth, Earnings and Dividends Per Share (Unit: NT$ and 1,000 shares)

Note 1: The BoD has not approved the proposed allocation of distributable earnings for the year. Note 2: If there’s any accumulated undistributed dividends, disclose the accumulated unpaid amount. Note 3: Price / Earnings Ratio = Average Market Price / Earnings per Share. Note 4: Price / Dividend Ratio = Average Market Price / Cash Dividends per Share. Note 5: Cash Dividend Yield Rate = Cash Dividends per Share / Average Market Price. Note 6: The financial report is under auditors review.

(6) Dividend Policy and Implementation Status

i. Dividend policy as per Company’s Articles of Incorporation:

Article 27-1 of the Articles of Incorporation was amended as per Article 235-1 of the Company Act, amendment is shown as follows:

Article 27-1: When allocating net income after tax for each fiscal year, this Corporation shall first offset its accumulated losses and set aside 10% as legal reserve, until the accumulated legal capital reserve has equaled the total capital of the Corporation; Then set aside special capital reserve which could be appropriated in accordance with relevant laws and regulations or business operation needs, if necessary. Distribution plan of the remainder surplus, together with the undistributed surplus in the beginning of the year, shall be proposed by the Board of Directors and submitted to the shareholders meeting for their recognition. The allocation of net profits will be decided by the Corporation in the aspects of its financial, business and operation status. Distribution amount shall not be lower than 10% of the distributable surplus. Such distribution may be made in ways of cash dividend and/or stock dividend, and preferably by way of cash dividend. Distribution of profits may also be made by way of stock dividend; provided that the ratio of stock dividend may not exceed 50% of the total distribution.

Year Item

2019 2020 As of

2021/03/31

Market Price per Share

Highest 64.90 85.00 102.00

Lowest 51.20 50.70 80.20

Average 58.20 70.75 86.75

Net Worth per Share

Before Distribution 35.19 37.45 (note 6)

After Distribution 31.48 (note 1) (note 6)

Earnings Per Share

Unadjusted Weighted Average Shares 3,854,519 3,854,519 (note 6)

EPS 4.14 6.57 (note 6)

Adjusted Weighted Average Shares 3,854,519 (note 1) (note 6)

EPS 4.14 (note 1) (note 6)

Dividend Per Share

Cash Dividends 3.70 (note 1) (note 6)

Stock Dividends

Retained Earnings 0 (note 1) (note 6)

Capital Surplus 0 (note 1) (note 6)

Accumulated Undistributed Dividends2 0 (note 1) (note 6)

Return on Investment

Price/Earnings Ratio3 14.06 10.77 (note 6)

Price/Dividend Ratio4 15.73 (note 1) (note 6)

Cash Dividend Yield Rate5 6.36% (note 1) (note 6)

- 90 -

ii. Allocation of distributable earnings at current AGM The FY2020 allocation of distributable earnings proposal has been approved by the FY2021 BoD as follows: A. Type and value of dividends distribution:

Stock dividend: NT$0 per share. Cash dividend: NT$5.20 per share (cash dividends NT$20,085,663,000)

B. Should the ratio of distribution be adjusted in response to regulatory changes, request from competent authorities or resolved by BoD to buy back treasury stocks, the Chairman is authorized to make necessary adjustments.

C. Upon approval from AGM, the BoD is authorized to set a base date for distribution.

iii. Expectation of significant changes in Company’s dividend policy: NA (7) Impacts from current dividend distribution on Company’s operations, EPS, and ROI: NA.

As no stock dividend distribution is planned for current period and financial forecast for FY2021 is not disclosed, it is not applicable to provide estimates on profit, loss, EPS, or any other assumptive data.

(8) Remuneration for Employees and Directors:

i. Percentage or scope of remuneration for employees and Directors specified in the Articles of Incorporation: Article 27 of the Articles of Incorporation stipulates that: “When allocating profits for each fiscal year, this Corporation shall set aside no less than two percent (2%) of the profit as employees' bonus and the remuneration of Directors shall be no more than 2%. However, the Company should set aside a portion of the profit to offset its accumulated losses first. Employee bonus as prescribed in the preceding paragraph is distributed in the form of stocks or cash, the employees qualified for such distribution may include the employees of subsidiaries of this Corporation specified by the Board of Directors. The remuneration of Directors as prescribed in the preceding paragraph shall be distributed in cash.”

ii. The basis for estimating the amount of employees and Directors compensation, for calculating

the number of shares to be distributed as employee compensation, and the accounting treatment of the discrepancy, if any, between the actual distributed amount and the estimated figure, for the current period:

A. The basis for estimating the amount of employees and Directors compensation is

calculated in accordance with details specified in the Articles of Incorporation. B. The basis for calculating the number of shares as dividends is subject to closing price a

day prior to AGM resolution and take into account of impacts from ex-rights and ex-dividends. Compensation for employees less than one share shall be distributed in cash.

C. Any difference between the actual amount of distribution resolved by AGM and the estimated amount of distribution shall be considered as variation in accounting estimate and recorded through income statement in the year paid.

iii. Information on the proposal of remuneration distributions resolved by BoD:

A. The estimated amount of distribution for employees’ bonus and remuneration for Directors is calculated based on net profit before tax of the respective periods before

- 91 -

deducting the amount of remuneration for employees and Directors, then multiply by the percentage of remuneration for employees and Directors specified in the Articles of Incorporation. The amount is reported as cost of operation or operating expenses for the year. Any difference between the actual amount of distribution and the estimated amount of distribution shall be considered as a variation in accounting estimate and adjusted as profit and loss in the following year.

The proposal for FY2020 distributable earnings has been approved by the remuneration committee and proposed to FY2021 BoD meeting for approval. The FY2020 Remuneration for employees and Directors is estimated at NT$2,560,433,000 and NT$14,000,000 respectively. Both employees’ bonus and remuneration for directors are distributed in cash. The distribution plan is calculated based on the most recent financial statements, which is no different from the original estimate.

B. The proposed amount of any employee compensation distributed in stocks, and the size

of that amount as a percentage of the sum of the after-tax net income stated in the company’s unconsolidated financial reports or individual financial reports for the current period, and the amount as a percentage of the total employee compensation: No stock compensation proposed for employees.

C. Estimated EPS after the distribution of compensation for employees and Directors: Given compensation for employees and Directors has been recorded as expenses, the estimated EPS after the distribution of compensation for employees and Directors remains unchanged at NT$6.57

iv. Actual amount of remuneration distribution for employees and Directors in the previous year:

FY2019 remuneration distribution for employees and Directors was NT$1,464,876,000 and NT$14,000,000 respectively. The distribution plan for employees’ bonus is calculated based on the most recent financial statements, which is no different from the original estimate. The difference of $28,000,000 between the estimated and the resolved distribution plan for directors’ remuneration was due to changes in accounting estimate and the difference will be adjusted as profit and loss in the following year.

(9) Stock Buyback

No stock buyback was recorded in the previous year and by the date of the report's publication.

2. Issuance of Corporate Bonds: NA 3. Issuance of Preferred Shares: NA

- 92 -

4. Issuance of Global Depositary Receipts (GDRs)

Date of issuance Item

2003/11/26

Period of Issuance 2003/11/26 to 2003/12/15

Place of Issuance and Transaction

Place of issuance: Europe, Asia, and America Place of transaction: Luxembourg Stock Exchange (LuxSE)

Total Amount of Issuance US$162,219,000, including new shares issued for capital increase in cash at US$117,550,000, the amount of issued shares is US$44,669,000.

Unit Issuing Price US$11.755

Total Units of Issuance 13,800,000 units

Securities Representing Sources

Combined issuance of new shares issued for capital increase and existing shares held by shareholders.

Securities Representing Amount

Each unit of GDR represents five common shares of the Company. The GDR issued represents a total of 69,000,000 common shares of the Company, including 50,000,000 new shares issued for capital increase and 19,000,000 issued shares. Price per share: equivalent to NT$80/share.

Rights and Obligations of GDR Holders

The rights and obligations of GRD holders are subject to relevant laws and regulations of the Republic of China and provisions specified in the GDR contract. Principal provisions of the GDR contract include the following: 1. Exercise of Voting Powers:

GDR holders may exercise the same voting rights as those of common shareholders as stipulated in GDR contract and regulations of the Republic of China.

2. Redemption of GDRs: GDR holders may request redemption and hand over equivalent number of common shares represented by GDR after five business days of issuance according to laws and regulations of the Republic of China and provisions specified in GDR contract. GDR holders may also request depository institution to sell equivalent number of common shares represented by GDR. When a GDR holder requests redemption and hand over equivalent number of common shares represented by GDR, the depository institution shall deliver shares through transferring using the depository booklet.

3. Dividend Distribution, Priority Right of New Shares Acquisition, and Other Rights: Should Quanta Computer distributes stock dividends or makes other allotments in the future, the depository institution may issue GDRs to the original holders at the original ratio they represent or raise the number of common shares that each unit of GDR represents. However, according to the US securities laws and other regulations, issuers shall register to or apply for a permit from the United States Securities and Exchange Commission (SEC) in advance. The depository institution may then sell shares represented by the GDRs of holders and distribute pro rata the income from GDR sales to GDR holders.

When Quanta Computer issues capital increase by cash or similar activity, the depository institution shall grant related rights to GDR holders within the scope allowed by law. However, according to the US securities laws and other regulations, issuers shall register to or apply for a permit from the United States Securities and Exchange Commission (SEC) prior to issuing new GDRs. In this case, the depository institution may sell the rights represented by the GDRs of holders and distribute pro rata the income from GDR sales to GDR holders.

Trustee NA

Depository Institution Citi Bank

Custodian Institution Citi Bank Taipei Branch

Outstanding Balance 1,518,388 units (as of 2021/03/31)

- 93 -

5. Employee Stock Options

No employee stock options or warrants were issued in the previous year and by the date of the report's publication.

6. Employee Restricted Stock

No employee restricted stock was issued in the previous year and by the date of the report's publication.

7. New Share Issuance in Connection with Mergers, Acquisitions, and Transfer of Shares

No such issuance was reported in the previous year and by the date of the report's publication.

8. Financing Plans and Implementations (1) Status of unfinished issuance or private placement of securities: NA (2) For financing plans that were completed in the previous quarter before the date of the

report's publication or in the most recent three years but have not yet fully yielded the planned benefits: NA

Treatment of Expenses Incurred At Issuance And Thereafter

1. GDR Issuance Fees Unless other agreements between the issuer and underwriter or depository institution otherwise required, all fees including legal consul fee, CPA fee, public offering fee, financial consultant fee, and any other related fees. Such fees shall be amortized by the issuing company and shareholder participants according to the actual shares issued.

2. Expenses incurred after issuance Unless other agreements between the issuer and depository institution otherwise required, the issuing company shall be responsible for public offering fee, information disclosure fee, and all other related fees.

Important Conventions About Depository and Escrow Agreement

The depositary institution performs the obligations for GDR holders, while the guarantee agency holds the GDR common shares.

Mar

ket

Pric

e P

er

Un

it

Highest 14.52

2020 Lowest 8.49

Average 11.98

Current year to

2019/03/31

Highest 17.36

Lowest 14.40

Average 15.42

- 94 -

V. Business Activities

1. Business Scope (1) Scope of business

i. Major Business Operations Established in May 1988, Quanta Computer is a one of the Global Fortune 500 Companies and also one of the world’s leading notebook manufacturers. Aside from our leadership position in notebook manufacturing business, we have extended our reach to cloud computing business, enterprise network solutions, mobile communications products, smart home products, autotronics, smart healthcare, IoT, and AI applications to proactively expand the integrated deployment of our operation and explore new business opportunities. Aside from receiving positive recognition from customers on Quanta’s R&D capabilities on various projects, the Company was also recognized for Derwent Top 100 Global Innovators in three consecutive years from 2019 to 2021. Leveraging our strong R&D capabilities, the Company invests tremendous amount of efforts in new business opportunities, new applications, and new products to accumulate and to strengthen R&D competences in capturing first mover advantage.

ii. Consolidated Revenue Breakdown:

FY2020 major products revenue contribution is tabulated below:

iii. New Product Development: With respect to user demands and future development of technology trends, we research and develop new products in the following areas: “Mobile Computing Solutions”, “Cloud Computing and Enterprise Network Solutions”, “Home Entertainment and Smart IoT Solutions”, “Smart Healthcare Solutions”, “Telecommunication Next Generation Central Office (NGCO) Solutions”, “Smart Manufacturing and Smart Factory Solutions”, as well as “AR/VR Solutions”. New products development in various areas include: 1. Mobile Computing Solutions:

Enable users to connect to the Internet from anywhere and at any time, to synchronize data ubiquitously with various mobile devices and peripherals, such as notebook PCs and various smart mobile computing terminals. By integrating the key technology in wireless telecommunication networks and the Internet, we develop System On Chips (SOCs) suitable for the wireless communication of notebook PCs, Wireless Local Area Network (WLAN) peripherals, wireless multimedia devices, and wireless information home appliances. We further develop small cells, millimeter microwave, sub-6G Hz access points, and Internet connection for Customer Premise Equipment (CPE) pending on the 5G deployment schedule.

Industry Sector Product Category Revenue Contribution (%)

Electronics Computer products 99.62%

Other electronics 0.38%

Total 100.00%

- 95 -

2. Cloud Computing and Enterprise Network Solutions: With the “public cloud” market as the foundation, we provide IT infrastructure solutions for hyperscale data centers worldwide. At the same time, as global IT solutions are trending towards cloud computing, we also develop solutions based on the Open Source Architecture to meet enterprise demand for “private clouds” or “hybrid clouds” solutions. We provide high-performance and high-capacity enterprise network systems that support different interfaces, package exchange among different layers, wired and wireless intranet and extranet connections, cybersecurity and firewalls, dynamic bandwidth and service quality management. These include the Just a Bunch of Disks (JBOD) product series, the Redundant Array of Independent Disks (RAID) product series, file server series, blade server series, and network switches, and rack architecture solutions.

3. Home Entertainment and Smart IoT Solutions:

We develop home multimedia smart entertainment products that support various multimedia applications, including home media centers; smart touch input systems for laptops, desktops, and thin client terminals; smart IoT controllers; sensors; smart speakers; and private servers for home. Besides, we’ve developed IoT solutions that centered around users to connect technology to the daily life of people, including smart home gateways and sensor hubs that cover applications for wearable products, smart healthcare, and smart homes. Smart home products that connect technology to the daily life of people can improve living quality and protect home safety through measuring and tracking personal health data, monitoring health conditions or controlling home appliances and security systems through smart home gateways at anywhere and anytime.

4. Smart Healthcare Solutions:

In response to the global demand for e-health and the global trend of low fertility rate and population ageing, we provide smart healthcare solutions for hospitals and homes through resources integration of Artificial Intelligence (AI) medical and 5G connected IoT devices. For smart hospitals, aside from our continued efforts in enhancing the “smart ward cloud caring system” that includes “smart healthcare infotainment terminal”, “smart medical cart”, and “smart nurse station whiteboard”, we’ve also developed “Artificial Intelligence (AI) Medical Cloud Computing Platform” that combines relevant software and hardware to assist hospitals and health care centers to develop technology know-how and services in precision medicine. For remote healthcare, we provide customized “smart tele-homecare system” based on different hospital needs that combines private cloud platform, machine learning, big data analysis, and software to form a complete tele-homecare and health management solution.

- 96 -

In response to the COVID-19 pandemic, we have adjusted the functions of the smart medical carts to integrate cloud computing technology and 5G connected devices to build an inter-hospital real-time collaborative diagnosis system and emergency transportation system. In AIoMT (Artificial Intelligence of Medical Things), we have also developed smart wearables and smart diagnostic devices such as the advanced product of “smart ECG/EKG”, optimized “smart wireless intraoral camera”, and “smart wireless otoscope” equipped with various autonomous management functions. By integrating Artificial Intelligence (AI), Augmented Reality (AR), And Virtual Reality (VR) technologies, these solutions offer scalability and value-added services based on actual needs of hospitals and homes through highly integrated hardware and software solutions and the cloud-based architecture. Massive clinical data is instantly integrated and analyzed with AI applications to assist in medical decisions, to enhance healthcare service efficiency, to reduce medical costs, to improve care quality, and thereby to create bigger long-term commercial value.

5. 5G solutions for Telecommunication:

In response to the competition in the global deployment of commercial 5G, Quanta has long cultivated our development in the telecommunication cloud market, through teaming up with key technology partners in 5G ecosystem, we are able to realize telecom network that is cloud-based, virtualized, and open. Along with the development of Cloud Native technology, Software-Defined Networking (SDN) and Network Function Virtualization (NFV), Quanta was able to enter the 5G network infrastructure through our expertise in datacenter technology and cloud-related products to satisfy the flexible needs in public 5G and private 5G or enterprise 5G.

6. Smart Manufacturing and Smart Factory Solutions:

The smart manufacturing system is built with the essence of technology and innovation in manufacturing. We incorporated sensor hubs and smart industrial gateways within the manufacturing system, coupled with smart control system and integrated with cloud computing architecture. The system enables real-time connection and information exchange among different types of equipment and partners, in order to better capture the operations of factories and the flow of supply and demand, thereby to enhance production efficiency and quality.

Factory manufacturing capacity, cost control, and quality control have always been our core competency. Following the development of Industrial 4.0, the application and innovation of big data and AI, and the integration and connection between cloud computing and IoT devices, we are committed to promoting smart manufacturing and smart factory to keep strengthening our core competitiveness and to incorporate technology from relevant industries to our product development.

- 97 -

7. AR/VR Display and Smart Glasses Solutions: From desktops through notebook PCs to tablets, it is expected that smart glasses and Optical Head-Mounted Displays (OHMDs) will be the next-generation of computing platforms. Quanta started to invest in these technology ahead of its peers, including deployment of R&D resources and production in key optical modules for near eye display and the technology integration required for OHMD manufacture. Our target is to stay ahead of competitors in AR/VR fields.

After years of deployment, the production lines for AR head-mounted displays (HMDs) and optical modules have been completed and small volume production has also been shipped. We have also expanded the deployment of various technology platforms and cultivated relationships with vendors for core chips, waveguides, corrective lenses, as well as branded customers to achieve our leadership position in the field of AR/VR applications.

(2) Relationships with the Supply Chain:

i. Product Development Trends and Competitions: In 2020, the outbreak of the COVID-19 pandemic drove the transformation of lifestyle and work patterns, and the rise in remote business opportunities, such as WFH (Work From Home), distance learning, and home entertainment increased greatly, injecting new life into the notebook industry, which had previously been widely considered to have already reached the plateau of its product life cycle, and thus bringing new growth momentum.

上游中游 Midstream 下游 Downstream

Chipset

GPU

PCB

Panel/Display Modules

DRAM chips/

Modules

Battery

PSU

Casing

CPU

Heatsink/ Module

Fan

Keyboard

HDD Network IC

LCD Driver IC

PC Peripheral IC

Passive

Components

Connectors

Notebook

Desktop

Server

Motherboard

DVD ROM

Industrial PC

Disk Array

Monitor/Display

Other Computer

Peripherals

Components of other computer peripherals

Upstream

- 98 -

Overall, the global demand for notebooks in 2020 was strong. In face of overwhelming demand, the industry faced a severe shortage of key components such as 8-inch wafer ICs and display panels. However, this did not overshadow the fact that shipments performed extremely well and reached new heights with each passing quarter. According to research reports from DIGITIMES, global notebook shipments reached 201 million units in 2020, a record high not seen since 2011, with a 25% growth rate compared to 2019. Unlike the traditional business model of the notebook industry in the past, the demand for educational mobile computing devices has increased exponentially in 2020 due to distance learning derived from epidemic prevention measures, with Google's Chrome OS and Chromebooks being the biggest beneficiaries of the demand for distance learning. Google's Chrome OS has been a dominant player in the educational market for a long time, further bolstered by its complete cloud resource package for the U.S. educational market. With the Chromebooks paired with a variety of telecom service packages, shipments of Chromebooks shown a significant boost in 2020. The most notable large-scale procurement project is the Japanese government's "GIGA School (Global and Innovation Gateway for All)", which was expected to provide each Japanese student in primary and secondary schools with one notebook PC by 2024. However, the impact of the COVID-19 pandemic has caused the Japanese government to advance the target to 2021, which was a key force driving the explosive growth of Chromebooks demand in 2020. As for the supply of key components of laptops processor, the largest supplier of CPUs, Intel, has been experiencing manufacturing issues which led to a shortage of output for its mainstream products. Its global share of the notebooks market experienced continues decline and its market share dropped to about 75% by the end of 2020. Its main competitor, AMD, had taken advantage of the momentum, with sales climbing continuously and boosted its market share to 20% in Q4 2020. On the other hand, MediaTek, Qualcomm, Apple and other companies are all optimistic about the growth potential of ARM-based processors that feature better cost advantages. Branded companies have therefore launched new models based on ARM processor with an attempt to expand its market share in the notebook market. For example, in 2020, Apple launched notebook products equipped with its first ARM-based processor, M1, which has subsequently gained a positive market response. In general, the years-long shortage of Intel CPUs, coupled with the entry of other well-known chip manufacturers, has led to a significant change in the market share of Intel-based notebook processors. The latest industry research report from DIGITIMES pointed out that in 2021, Intel’s CPU shipments would fall below 70% for the first time due to the prominence of a large number of alternative solutions from AMD, ARM, and other processors based on different architecture. In light of the above, global notebook sales in 2020 showed a slight increase in shipments of commercial notebooks and a significant increase in educational notebook shipments. At the same time, consumers are allocating more budgets in purchasing consumer electronic products, especially for larger screen size laptops due to longer periods of time spent at home and boosted by additional economic stimulus plan from

- 99 -

the U.S. government, resulting in an increase in consumer laptops sales, which were previously expected to show underperforming growth. Looking at the notebook PC market, each brand has positioned their foothold in their respective segment in consumer, business and gaming market, and the branded companies have become more mature and stable in terms of market segmentation and industry chain. However, unlike previous years, the rise in demand for educational laptops has caused the market ranking of each brand to increase or decrease quarter by quarter. However, to conclude the performance of global notebook brands in 2020, the top three global brands in terms of market share was still Hewlett-Packard (HP), Lenovo and Dell. In the cloud market, in response to market demand derived from COVID-19 epidemic prevention measures, the growth rate of cloud-related industries made notable gains in 2020. According to the latest data from Synergy Research Group, a data center research organization, the total number of data centers from the hyperscale service providers reached 600 units in the fourth quarter of 2020, which is twice the number in 2015. The industry is expected to continue to maintain a high growth trend in 2021. Gartner, a leading international IT research firm, forecasts that global data center investment will reach $200 billion by 2021, up 6% from the previous year. While the U.S. remains the main market for major cloud and IoT data centers, accounting for about 39% of the total demand, but demand in Europe, the Middle East and the Asian Pacific region will continue to maintain its high growth rate. China, Japan, the United Kingdom, Germany and Australia together accounted for 29% of total demand. In the past four quarters, new data centers commenced operations in 17 countries, mostly in the United States, South Korea, China, Canada, the United Arab Emirates, Indonesia, Italy and South Africa. Among the hyperscale service providers, Amazon, Microsoft and Google together still own more than half of the world's data centers, while Oracle, Alibaba and Facebook are also actively investing in the buildup of data centers. In light of the impact of the ongoing pandemic and to reduce the risk of unexpected systemic disasters in the future, enterprises in both public and private sectors have started to emphasize and invest in Business Continuity Planning. The characteristics of cloud-based IT architectures, such as Agility, Elasticity, Serviceability, and Innovation coincide with the needs of this trend, and have become a powerful tool to support business continuity planning such as remote work. They have become the core aspects of the design of hyperscale cloud data centers. Quanta has always been committed to extending the design of hyperscale cloud data centers by providing standard and open data center products with ultra-high efficiency, high scalability, reliability, manageability, serviceability and optimized performance for a wide variety of data center service types and workloads. According to international research institutions, cloud computing, intelligent analytics, mobile applications and social networking (Cloud, Analytics, Mobile, Social, also known as CAMS) are the four major technological trends in the future, and this will fundamentally transform the current IT architecture, leading all industries to coincidentally move towards the development of an intelligent cloud-based information infrastructure, which will focus and strengthen the innovation and competitiveness of the industry.

- 100 -

The telecom industry in the post-epidemic era will need to address trends such as network transformation, the rise of Open RAN open architectures, and enterprise digitalization. According to the Global Mobile Trends 2021 study published by the GSMA, the timing of 5G adoption will coincide with the availability and commercialization of open technologies such as Open RAN, and more than half of telecom operators are willing to include new vendors in 5G networks, providing new opportunities for information technology and communication technology providers to enter the 5G market. With the establishment of 5G standards and the increasing maturity of the technology, consumers have become accustomed to using mobile communication software, social networking sites, live streaming and other social audio and video services through smart devices such as mobile phones, making the penetration of smart devices and mobile communication networks in the global market greater than ever. It is expected that almost all smart devices will rely on mobile communication networks to compute data in the future, and consumers are increasingly demanding for low latency and bandwidth of mobile networks. In response to this trend, telecom operators must migrate computing commands to the edge network by introducing edge computing and other related technologies and services to reduce the workload on the core network and reduce the impact of network latency to meet the needs of applications such as Virtual Reality (VR), Augmented Reality (AR), Internet of Vehicles (IoV) and Internet of Things (IoT).

(3) Research and Development

i. R&D Expenses in The Year and by The Date of the Report's Publication:

Our FY2020 R&D expense was around NT$16.8 billion, an increase of NT$1.7 billion from NT$15.1 billion in 2019 or 11% increase. R&D expenses as a percentage of revenue in these two years are 1.54% and 1.47% respectively.

Quanta’s production and service locations are across Asia, North America, Europe, and South East Asia. Our product lines are across information, communications, consumer electronics, and cloud computing areas. We also actively develop our R&D and manufacturing center in Taiwan to achieve our strong competitiveness in global manufacturing and sales.

With innovation and R&D capabilities as our core competitive strength, we focus on the “New 3C” technologies and applications to continue to devote into Cloud Computing, Connectivity Technology, and Client Devices as the foundation of our development. We further integrate big data management to develop a complete ecosystem for Artificial Intelligence (AI) tools. We are devoted into becoming a leading system solution provider in all application fields of the AI economy. To realize “humanized automation service”, we actively engage in the development of innovative technology, including advanced


Year Expense (A) Revenue (B) (A)/(B) %

FY2019 15,092,935 1,029,611,414 1.47%

FY2020 16,752,553 1,090,858,851 1.54%

- 101 -

and high-performance sever technologies, integration of products and technology in quality improvement and IoT. We further extend our reach to emerging areas, including cloud computing solution, AI application, 5G next-generation telecommunication technology, smart wearable, smart home application, smart mobility, smart healthcare, and smart manufacturing. We cultivate new customers with customized solutions and provide customers with the best product and service value.

ii. Products and Technology Achievements:

Our R&D planning comprises three parts: Advanced R&D, Corporate R&D, and Business Unit R&D. Through synchronized development and integration in various aspects of technology, application, and products, we are able to maximize the R&D synergy. Advanced R&D focuses on long-term research & development in products that can be commercialized in three years or longer through collaboration with the academia to achieve academia-industry collaboration. Corporate R&D focuses on medium-term research development in products that can be commercialized in one and a half years to three-year’ time frame. Business Unit R&D focuses on short-term product planning that can be commercialized in less than one and a half years. Through comprehensive planning in long-term, medium-term, and short-term R&D, we hope to strengthen Quanta’s R&D capacity, in order to transform into a total system solution provider in various markets, including consumer electronic products, cloud computing, and vertical applications for commerce and industry.

In the development of cloud computing industry, we are actively engaged in the “Telecommunication Central Office 2.0 Solution” based on market demand. Three industry-leading infrastructure solutions below are introduced to accelerate the deployment and roll out of 5G Central Office to fulfill users’ demand for high-efficiency networks and low-latency applications and services. Such solutions would further reduce the capital expenditure (CAPEX) and operating expense (OPEX) for telecommunication operators and create greater competitiveness for customers.

1. The optimized QxStack NFV Infrastructure Platform that supports the

telecommunication-organization-grade of Network Function Virtualization Infrastructure (NFVI) to assist telecommunication operators to deploy stable and flexible infrastructure, allowing the traditional network functions to relieve from proprietary hardware infrastructure and to realize software-defined network functions on standard servers, switches, and storages.

2. 5GDC (5G Data Center) based on container technology is an upgraded version of

NGCO (Next Generation Central Office) solution. By expanding on NGCO's outstanding capabilities in software and hardware integration and optimization, 5GDC further replaces VM (Virtual Machine) with the latest container technology to provide higher agility, scalability, and flexibility for more low-latency, high-bandwidth, and widely connected 5G applications. Our automated and zero-touch container platform, which was designed in-house, is equipped with cutting-edge workload processing capabilities empowered by our ecosystem partners, with

- 102 -

easier management and monitoring functionalities to meet customers' application needs in the 5G era.

3. Quanta’s Enterprise 5G solution is based on our self-developed 5G SA (Standalone) core network as the backbone, and integrates 5G RAN and edge computing equipment to provide customers with a customized end-to-end dedicated network architecture, which not only realizes large bandwidth and low latency signal transmission, but also comes with Operation, Administration and Management (OAM) software to provide a convenient and user-friendly interface. This dedicated network is widely used in many industries and verticals, such as manufacturing, agriculture, and entertainment, and offers far-reaching potential applications.

Adhering to our belief in constant “innovation” and “R&D”, we spare no effort to develop new technologies and products. In protection of intellectual property rights of our R&D efforts, we have applied for 7,295 patents by 2020 in Taiwan, the U.S., mainland China, Japan, and Europe and acquired 5,201 patents covering notebook PCs, servers, AI, big data, and cloud applications from mainland China, the U.S., England, France, Germany, and Japan.

(4) Short-Term and Long-Term Development

i. Short-Term Strategy 1. Production and global deployment strategy

Our global deployment is centered around the principle of “Taiwan design, smart manufacturing, global logistics and sales”. We have built high-efficiency production sites in Taiwan, Shanghai, Changshu, Chongqing in mainland China, as well as Thailand. In order to maximize the effectiveness of mass production with centralized management and just-in-time distribution, we have established regional manufacturing sites and maintenance locations in Taiwan, the U.S., and Europe to complete the top-down integration and gradually accelerate the adoption of automation and smart manufacturing in our production sites. Therefore, we can achieve the goal of effective cost control and production that meet the economies of scale. Furthermore, by teaming with overseas production sites, we provide services with proximity to customers and market, and assemble products with flexibility based on different customer requirements. Doing so would allow us to shorten production lead-time, reduce transportation cost, and to meet the actual needs of customers.

2. Product development strategy Aside from notebook PCs that have entered its maturity, we spare no effort to expand existing product lines and market share. Going forward, the Company will focus on cloud computing as our core value to develop comprehensive products for consumers and business in collaboration with the group and subsidiaries. These products include notebook PCs, smart terminal devices, data center platforms, IoT products, autotronics, robotic arms, and smart healthcare products, in order to capture the business opportunities in the “new 3C” market and the extended applications from AI in different vertical markets.

- 103 -

In terms of cloud infrastructure, we will deepen our software development capability to build cloud service platforms. The focus of our software development efforts will be solutions and applications in storage, big data analysis, high performance computing (HPC), and machine learning. We provide customer with a unique one-stop-shop services, from R&D, design, production, solution, to services. Meanwhile, by integrating “cloud computing”, “connectivity technology”, and “client devices”, we aim to stay ahead of competitions in smart application integrated in the 3C era. Good progress has been made in various areas, such as wearables, connected devices, smart home equipment, and servers.

3. Operational performance strategy

We implement the profit-center system down to the Business Unit level to promote virtuous competitions within the organization and to achieve the best operational results. We also make full use of products from our affiliates to complete upstream and downstream integration and to centralize procurement of common parts for cost control and risk management. In terms of manufacturing, we persistently promote the construction of Industrial 4.0 and to move towards Industrial 5.0 collaborative humane smart manufacturing. We focus on upgrades in automation, smart manufacturing, system with data analytic and integrated analysis capability, deepened delicacy management and strict cost control. Through automated production coupled with reasonable improvement in production flow, we introduced automated technologies and robotic arms to plan collaborative production between human and machineries. Combing the accuracy of automated equipment and the cognitive and critical thinking skills of human to significantly escalate the efficiency and accuracy of production.

4. Market strategy

World-leading branded companies drive the technology upgrade for the entire supply chain through continuous innovation in product design. As a smart manufacturing service provider of electronic products, we must follow closely the footstep of product innovation and technology upgrade of global high-tech products to improve product quality and increase flexibility. Doing so, we can build long-term and stable partnerships with customers with fast responding manufacturing services and grasp the key to continuous growth in business. Therefore, apart from strengthening our R&D capacity, we spare no effort to optimize production technology, improve product quality, and enhance yield rate through equipment upgrade and automation enhancement, in order to ensure the stability of manufacturing quality, technology upgrade, and strengthen leadership position in the sector.

ii. Long-Term Strategy

1. Market strategy Starting with laptops, we extend from IT industry to cloud computing to develop various technologies, applications, and related products based on data economics. With the “new 3C” as the focus of our R&D, we retain existing notebook customers and promote new types of consumer electronic products developed by the Company to our existing customers in order to equip customers with a full product

- 104 -

line for market expansion. In response to the current environmental protection topics, we endeavor to develop and design products that are more resource efficient to cherish materials and to minimize defective and scrap rates. Our target is to equip our products with industry leading design, superior quality, and quick market entry, and to create win-win relationship with customers with better cost competitiveness. In addition, we will establish brand new economic and industry strategies, begin to develop AI open platforms, and commercialize academic research studies in AI, in order to display the demonstrative effect of the leading industry and to establish the AI ecosystem.

2. Production and global deployment strategy

Electronic products are trending towards higher level of personalization, coupled with customers’ increasing needs to establish localized services will create a tough challenge for manufacturers. In terms of manufacturing, the Company’s focuses are enhancing innovation capacity and fundamental capability of manufacturing industries. In practice, we will foster the in-depth fusion of cloud computing and manufacturing technology and promote the development of high-end, smart, green, and service-driven manufacturing technologies to achieve smart manufacturing. Currently, we have completed manufacturing, maintenance, repair and distribution centers in Taiwan; California and Tennessee in the U.S.; Aachen in Germany; Singapore; Shanghai, Changshu, and Chongqing in China; as well as Chonburi in Thailand. We continue to keep an eye on other potential regions to stay flexible of our global deployment based on business development needs, in order to control cost effectively and to fulfill customer needs.

3. Product development strategy In view of the digitization and smart trends across the world, we focus on cloud computing as the fundamental development in the core equipment and total solutions of cloud data centers and the continuous development in AI applications. We develop and promote technology innovation, capability enhancement, and product upgrade to continuously enhance our capacity to develop cloud computing solutions, and endeavor to become the most compatible provider of the core products and total solutions in cloud computing. Our nature of sustainable development lies on the pursuit of operational growth through constant R&D, continuous innovation, and keeping pace of the time. We grasp firmly on the potentials of products in maturity, seek profitability from products in puberty, cultivate products in infancy, and engage in R&D and innovation for seedling products. With these four main development strategies, we aim to secure the technological leadership of Company’s products and long-term competitiveness.

4. Operational performance strategy

- 105 -

Providing products with the best price-to-performance for customers and consumers is our commitment. Therefore, we strengthen partnerships with important suppliers and leverage the know-how of our R&D capability to develop core technologies and components with suppliers, in order to develop cost-competitive products with high added values. Quanta will continue to solidify our R&D capability, deepen delicacy management, optimize cost structure, advance manufacturing technology, strengthen global deployment, and keep close track on risk control in order to pursue long-term and steady operational performance through optimizing each operational process.

2. Overview of Market and Sales

(1) Market Analysis i. Major Products and Service Regions:

Notebook PCs are our major product and are mostly for export, major importing regions are as follows:

Year Region

FY2019 FY2020

U.S. 51.11% 51.36%

Mainland China 10.53% 10.60%

The Netherlands 7.15% 6.39%

Japan 5.98% 7.25%

Others 25.23% 24.40%

Total 100.00% 100.00%

Our products are sold worldwide and the composition of our customers is quite diversified with the U.S. being the major importing region, followed by mainland China. We are devoted into market diversification and actively cultivating business in Asia Pacific regions.

We are unique in R&D, design, manufacturing, and sales of our products. Assembly plants and after-sales service centers are established in Taiwan, California and Tennessee in the U.S., Aachen in Germany, South Korea, Japan, Singapore and Thailand. With SAP information systems implemented, we provide branded notebook suppliers and mega data center customers with more efficient global services and technical supports. Leveraging our strong R&D capacity, high-efficiency and high-quality product development and production capability, global logistics, speedy and flexible delivery services, and economies of scale, we are able to maintain high market share in the world. We further establish maintenance and repair locations overseas to provide quick after-sales services and assist customers to improve product quality and to consolidate market position.

Keeping in pace with the development of cloud computing business, we focus on the expansion of large data centers, strengthening market share as the development strategy, targeting at the business opportunities from the infrastructure reform of private cloud service providers, telecommunication operators, and the raising demand

- 106 -

of cloud data centers. Apart from establishing strategic partnerships with worldwide system integrators, we set up local sales offices in the U.S., Germany, mainland China, Japan, South Korea, and Singapore to stay proximity to markets and to respond fast to customer demands. We have business presence across North America, Europe, and Asia Pacific, becoming a leading cloud hardware provider with global deployment.

ii. Market Share:

As a global leader in ODM, OEM, manufacturing, and related services, we provide customers with the most competitive products and services in the market, including total solutions covering design, manufacturing, and logistic supports. According to Digitimes Research, global notebook PC shipment in 2020 was 201 million units, while Quanta shipped approximately 59.8 million units (excluding detachable notebooks), accounting for 30% of the market share. We are also an important cloud data center solutions provider with strong capability in leading technology, highly customizable design, and flexible services to provide the optimal solutions for cloud computing environment and to help data center customers to optimize the market competitiveness of their products and services. In recent years, we have been devoting efforts in improving our core business in manufacturing through technology advancement. Apart from introducing lighter-weight notebooks with better performance in response to market trend, developing more advanced and higher performance servers to fulfill the demand of the growing cloud industry, we are also engaged in the development of VR, AR, MR, 5G solution, smart healthcare, IoT, autonomous vehicles, autotronics, and AI products to capture new business opportunities. In smart manufacturing, we are devoted into developing and selling automated equipment, specifically, the automated robotic arms with optical and visual sensing capabilities was launched in 2017 and sales momentum remained strong in recent years. Furthermore, we will embark solutions integrating technology and AI in healthcare and IoT industries to cultivate new market opportunities.

iii. Future Demand and Market Growth Potential:

Although the first quarter of 2021 is the traditional off-season for the consumer electronics market, the shortage of key parts and components such as ICs and display panels remain worrisome. The continued impact of epidemic control measures have drove strong demand for notebooks, albeit slightly lower in shipments compared to the fourth quarter of 2020. Compared to the same period last year when production in China was interrupted due to the delayed return to work during the Chinese New Year because of the COVID-19 outbreak, the overall notebook industry shipment has shown nearly doubled high-plateau growth. With the extended telecommuting policy implemented by many enterprises in 2020, while some enterprises will extend telecommuting policies until September 2021, this has prompted notebook vendors such as HP, DELL and Lenovo to launch new mid-range and high-end hybrid notebook models for commercial uses in response to the prevailing trend, which is expected to continue the strength into the first half of 2021. In addition, in the educational market, there are still many countries around the world with unmet demand for distance learning equipment, as evidenced by the fact that countries in Central and South America and Asia-Pacific regions are also beginning their purchases

- 107 -

of notebooks for educational market in 2021. Therefore, it is expected that the demand for commercial and educational notebooks will continue to grow in 2021 and continue to drive total notebook shipments. In general, although COVID-19 vaccines are being administered worldwide in 2021, the spread of the virus is unlikely to be completely contained. In 2021, Work From Home (WFH), Online Learning (OL) and the Stay-At-Home Economy will continue to become the “New Norm”. According to the latest research from TrendForce, global notebook shipments will see another growth momentum in 2021 compared to 2020, and the estimated annual shipment is likely to reach 217 million units in total. In the cloud computing market, the 5G era would bring explosive growth in data volume, network traffic, data storage, and innovative application services including IoT, big data analysis, machine learning, HPC, and mobile services. The demand for public cloud services remains robust, not only is the demand from personal reliance continue to accelerate, the growth from enterprise investment in datacenter buildout is also growing at a fast pace. In the telecom market, telecom service providers will face major challenges. On one hand, telecom service providers fear for the delayed return of investment from the large-scaled capital expenditure in 5G infrastructure buildout, and on the other hand, they fear for the uncertainty of future business model. Telecom service providers will also face threats in profitability from the fierce competition of over-the-top (OTT) businesses. To reduce operating costs, some telecom service providers started to adopt architecture that utilizes industrial standardized hardware integrated with open and virtual platform technology to provide “end-to-end” infrastructure to support the market demand for innovative applications. Rakuten Mobile, the largest telecom service provider in Japan, is the best example of this concept. Rakuten is the pioneer in extending from wireless access points (WAP) to core networks, it relies on software automation to control mobile communication network. The biggest difference in implementation from other telecom service providers around the world is that the architecture adopts the visionary and innovative “cloud native architecture”. Such aggressive and innovative model has shocked the telecom market and pushed other telecom service providers to follow and to review the existing costly architecture, and to accelerate the rise adoption of the “cloud native architecture.” Based on the estimate from Open Networking Foundation (ONF), a foundation that is very active in this type of innovative architecture, the push of new demand from 5G infrastructure build out, the “cloud native architecture” can bring about US$300 billion worth of business opportunities to suppliers. Taking the initiative, Quanta collaborated with Intel and open-source solution leader Red Hat to build an end-to-end cloud native architecture for Rakuten Mobile. In the rise of 5G, Quanta is ready and well-prepared to tap into the telecom market. In VR and AR related industries, with branded companies become more familiar with the AR technology, demand for AR products has also become more diversified. Two major types include:

- 108 -

Integrated HMD: in response to different usage scenarios and demand for comprehensive functions, including the detection of six degrees of freedom, detection of spatial and distance, or sensors for special temperature and recognition, it is usually equipped with a microcomputer with strong computing capability and battery capacity.

Consumer smart eyewear: Emphasize appearance, light weight for prolonged wear, integrated with personalized corrective lenses, and high durability and energy-efficient design for whole day wear.

The development of software application is the last mile of AR displays. Previously, the development of software and application was difficult in the absence of appropriate hardware. It is expected that with the gradual maturity of hardware technology, the hardware infrastructure in 2021 should meet the needs software development, enabling the implementation of social media and instant message. With the support of appropriate software and application development, the AR market can progressively expand. Upon breakthrough in technology coupled with the availability of 5G infrastructure and services, application diversification will begin and further integrate with future applications of optical engine in next-generation computing technology.

iv. Competitive Strength: 1. Organizational innovation brings more complete functions and services for

customers After developing and selling branded products in the cloud equipment market, we have added many organizations and functions of a branded company to provide customers with more complete value and services. We have established many sales locations in Europe, Americas, and Asia to promote branded products of servers and full-rack solutions. We also provide solutions with a complete service process, including design, manufacturing, integration, optimization, deployment, and after-sales service in support of global system integration and worldwide maintenance and repair centers. The integrated one-stop shop service effectively increased overall efficiency and productivity, providing customers with precise, fast, and solutions that are close to customer demands.

2. Key success factor remains with our R&D and innovation capability Apart from production cost, speed to R&D has become another competitive strength in Taiwan’s IT industry. In addition to years of devotion in notebook PCs, we also have full control of R&D and speed in the area of higher level of technology, such as servers, storage, and switches. Leveraging our strength in R&D capacity and a robust management team, we make continual improvement in product R&D and component integration. In fact, our strong capabilities in observing market demand, leading new product R&D trend, and innovation in technology has allowed us to maintain leadership position in the market and won customer acclaim and recognition. In the global data center equipment market, Quanta is ahead of competitors both in terms of shipment volume and technology advancement. Apart from leading

- 109 -

R&D and innovation capability, a powerful sales and service team, we also engage in forward-looking technological collaboration with top tier partners in the value chain. We further extend our strength in innovation to secure our market leadership.

3. Unique competitive strengths in full product offering, product integration, and

capability optimization We are committed to providing standardized and open-source data centers, our product lines include rack solutions, storage, switches, fully integrated rack solution, and cloud computing solutions. We provide ultra-high efficiency, high elasticity, reliability, manageability, serviceability, and optimal functions tailored for different data center service needs and workloads. As one of a few cloud hardware providers around the world that provides servers, storage, switches, and integrated rack solutions, Quanta plays an essential role in the cloud ecosystem. Our product integration and capability optimization will further push innovation in cloud computing and possess Quanta with unique competitive strengths in the cloud supply chain.

v. Favorable and Unfavorable Factors for Long-Term Development and Countermeasures:

1. Favorable Factors: (1) Complete IT industry system in Taiwan

A complete production and management system is one of the strengths to maintain competitiveness of IT industry in Taiwan. We are devoted in vertical integration with hopes to maintain stable supply and quality of raw material by taking proximate resources with the complete vertical integration system of Taiwan’s IT industry from upstream to downstream. Apart from providing upstream suppliers with the technical supports needed for quality improvement, we also established related business units and subsidiaries for some of the key components, in order to maintain product quality when shipment volume surges, and to provide customers with quick and satisfactory services.

(2) Key success factor with strong R&D and innovation capability: Speed to R&D and innovation capability are important competitive strengths of Taiwan’s IT industry. Particularly, the control of speed from new technology development to mass production is exceptionally important. Key management team is equipped with technological background in respective professions, with the strong R&D team, we continue to lead the industry in new product development and technology innovation. Thus, we can win the praise and recognition from customers when conducting ODM businesses. In the support of solid R&D capability, a robust management team, and the innovation capability of Quanta Research Institute, we continuously develop and integrate new products and new markets in order to maintain technology leadership.

- 110 -

(3) The popularity of international division of labor for production and marketing Given the increasing competition of high-tech products, international brands begin to seek strategic partnerships with overseas ODM companies in order to stay focus on their core business and lower cost. The branded companies leverage professional division of labor to achieve operational flexibility and price competitiveness. Taiwanese IT manufacturers won the recognition of global high-tech companies on our superior advantages in speed to R&D, production cost, and flexible delivery. Quanta has become the first-tier partner of choice to global leading branded customers with our competitive strengths in innovation and R&D, quick response to customer demands, high-quality products and services, efficiency, and cost effectiveness. Our long-term customers include world-leading computer brands and cloud service providers. Apart from setting up maintenance and repair centers in Europe and the U.S., we further established assembly and logistics centers to reach our target of global logistics. We aim to achieve quick, direct, and on-time delivery to stay close to customer demands and to provide them with the best products, services, and experiences.

2. Unfavorable Factors:

(1) Shortage of R&D workforce As the high-tech industries grow rapidly, the demand for R&D workforce continue to accelerate, coupled with the changes in social value and diversified employment options for young generations. The shortage of R&D workforce is common in Taiwan, causing operation burden on recruitment and production costs. Solution: a. Provide competitive salary and welfare, reward mechanism is also implemented,

including performance bonus and achievement bonus to incentivize base-level employees. The HR department also designates personnel to plan comprehensive welfare measures to help employees with work, learning, and career development. We care about the well-being of our employees’ mental and physical condition in order to achieve work and life balance.

b. Execution and specific measures of “Taiwan Design, Smart manufacturing,

Global Logistics and Sales” include: Implement automated technology and establish Industrial 4.0 to enhance the efficiency and improve the quality of production. At the same time, we consider automation for mass production right at the beginning of R&D and product design to reduce the need of workforce on production lines.

c. Standardize design, accelerate the development speed, shorten the

development cycle, and transfer the production of products with large quantity but low value-add to regions with lower labor cost.

- 111 -

(2) Currency risk Given the supply of key components comes from Japan, Taiwan, and mainland China, while most products are exported to the U.S. and Europe, our export dependency is high, and currency volatility would affect profitability. Solution: a. Use single currency for quotations with suppliers and customers to balance part

of the currency risk.

b. Enhance the understanding of currency hedge for financial personnel, maintain connection with Reuters and financial institutes to timely monitor forex information, study and judge future forex trend, leverage financial instruments to hedge currency risk, and designate responsible personnel to engage in forex operations for hedging.

(3) Intensified competitions

The life cycle of high-tech products is short, as functionality continues to improve and prices continue to decline, coupled with the popularity of network infrastructure deployment and the invasion of different kinds of emerging mobile computing devices, market competitions are increasingly intensified. Furthermore, the global economy and business operations face severe challenges from the constant changes in the international political and economic conditions, as well as uncertainty from the US–China trade war, Brexit, the rampancy of COVID-19, the failure of talks on oil production cuts. Solution: a. Demonstrate full R&D capability to develop various new models of different

levels and different styles to meet the needs of different customer requirements. Increase value-add for products and launch products in mass production ahead of competitors, in order to capture higher profitability at the beginning stage of new product launch.

b. Actively diversify in response to market demands to disperse the operational risk

of overly centralized on a single product or business and to increase the source of income.

c. Strengthen close partnership with world-leading suppliers and continuously

enhance our design capacity and strength in manufacturing capability to become the major supplier for key customers. Thus, we can demonstrate the benefit of the scale of economy from capacity utilization, enhance production efficiency and yield rate, reduce manufacturing costs, and enhance quality control in manufacturing process to reduce the occurrence of external costs.

d. Establish an information platform with customers and upstream component suppliers with the SAP system to timely capture inventory level of components and future demands to achieve just-in-time supply. Reaching the target of lowering inventory management cost and reducing losses from idol inventory.

- 112 -

(4) Import dependency of key components

Although the high-tech industry is well-established in Taiwan, key components for main products, such as LCD, CPU, and HDD, rely on imports from suppliers in the U.S., Japan, and South Korea, making it difficult to control the material cost. Solution: a. Strengthen our own procurement capability, establish sound and long-term

partnership with suppliers, and cultivate multiple suppliers to disperse risk of overly centralized procurement.

b. Develop new technology for components in collaboration with suppliers to

strengthen mutual trust and mutual dependency.

c. Seek alternative material without sacrificing product functions and optimize manufacturing technology, enhance production yield rate, and reduce defective rate.

(2) Key Applications and Production Process of Main Products:

i. Key Applications of Main Products 1. Laptops: Features are lightweight, thin, slim, and small, while key functions include

word processing, data management, typesetting, industrial design, presentation, statistical analysis, and multimedia.

2. Smart wearables: With the miniaturization and accuracy enhancement of sensors,

smart watches and smart bracelets can provide data with values including heart rate, pedometer, exercise scheduling and choices, message alert, and phone functions. Through function improvement, applications of smart wearables have extended to consumer electronics, healthcare, and medical markets.

3. Smart speakers and related products: As the user experience ameliorates and the creation of innovative operating mode accelerates, smart speakers and related products are swarming with the market. Users can input requests through verbal comments and receive instant response from the cloud application and enjoy easy shopping, note taking, information searching, and connecting other applications.

4. IoT devices and controllers: The rise of the Internet of Everything (IoE) also drives the formation of smart devices ecosystem. From the vertical market to household products, the wave towards smart has begun, as a result, the demand for extended products also enters into the household market. For example, installing an integrated device at home, allowing all smart devices at home to be connected and users can monitor and capture data over the internet, after analysis using big data and AI, information are collected from various aspects for users’ reference.

5. Server and cloud computing related products: As the infrastructure provider for IaaS and PaaS for data center, our product range covers integrated platforms for private cloud services, high-performance in-depth machine learning and data

- 113 -

analysis frameworks, Software-Defined storage systems, and Central Office solutions for 5G telecom operators to help enterprise customers to develop complete cloud-based infrastructure.

6. AR related products: The key to overall functions and style of the optical head-

mounted display (OHMD) is optical module. From this, we gradually develop related optical alignment and production technologies, and extend to the design and manufacturing of OHMD and smart glasses.

- 114 -

ii. Production Processes for Main Products

Production Process

Air

compressor

PCB Component

Placement

PCB

Group Processing

Entry Stock

Packing

Final Quality

Assurance

Final Assembly

Semi-finished

Sub-Assembly

linellinlllineproduc

Oscillator, transistor,

IC, circuit board,

resistor, capacitor,

inductor, diode,

connector, transformer

IC, resistor, capacitor,

inductor

Assembly and functional

test for smaller hardware

Disk Drive, Hard Disc

Drive (HDD), DVD

Drive, Liquid Crystal

Display (LCD), NiMH

battery, keyboard,

plastic housing, smaller

hardware

Accessory Packing

No Wastewater Generated in The Production

Surface Mounted

Device

Conveyer

Conveyer

Conveyer

- 115 -

(3) Supply of Key Material:

Name of Material Main Suppliers

Liquid-Crystal Display (LCD) AU Optronics, InnoLux, LGD, BOE

Hard Disk Drive (HDD) Seagate Technology Taiwan, Western Digital Taiwan, Toshiba Taiwan

Battery Simplo Technology, Desay, Dynapack, Sunwoda

Central Processing Unit (CPU) INTEL、AMD 、Qualcomm, MediaTek

Optical Disc Drive (ODD) HLDS

CPU is the most expensive key component of a notebook PC, followed by LCD and HDD. Our key customers are mostly world-leading brands, who either manufacture related parts and components in-house or procure them independently. In addition, our capacity has reached the economies of scale, thus bringing us advantages over procurement and better bargaining power. In recent years, we have been proactively cultivating multiple sources of suppliers for key parts and components, so to effectively reduce the risk of overly centralized procurement.

(4) Major Suppliers and Customers in The Past Two Years: i. List of Major Customers:

1. List of customers contributing 10% or more of annual sales in any one of the past two years:

2. Causes of Changes:

No significant change of major customers reported in the past two years.


No.

FY2019 FY2020

Name Amount Percentage in annual sales

Relations with

issuer Name Amount

Percentage in annual

sales

Relations with issuer

1 A 572,560,885 55.61% NA A 575,423,462 52.75% NA

- Others 457,050,529 44.39% - Others 515,435,389 47.25% -

- Net sales 1,029,611,414 100.00% - Net sales 1,090,858,851 100.00% -

Note: List the name of customers contributing 10% or more of annual sales in the past two years and their sales amount and proportion. However, codes can be used when non-disclosure is requested in the sales contract or the counterparty is an individual and a unrelated party.

- 116 -

ii. List of Major Suppliers: 1. List of suppliers supplying 10% or more of total procurements in any one of the past

two years

2. Causes of Changes: No significant change of major clients reported in the past two years.

(5) Production in The Past Two Years:

(expressed in 1,000 pieces/NT$ thousand)

Change analysis: No significant change.

(6) Sales in The Past Two Years:

*Note: Difficult to categorize due to complexity of product types. Change analysis: No significant change.


No.

FY2019 FY2020

Name Amount Percentage in

annual procurements

Relations with

issuer Name Amount

Percentage in annual

procurements

Relations with

issuer

1 A 270,726,041 28.00% NA A 313,845,278 29.79% NA

- Others 696,231,911 72.00% - Others 739,687,603 70.21% -

- Cost of goods

procured 966,957,952 100.00% -

Cost of goods procured

1,053,532,881 100.00% -

Note: List the name of suppliers with total supply 10% or more in the past two years and their supply amount and proportion. Codes can be used when non-disclosure is requested in the sales contract or the counterparty is an individual and unrelated party.

Year

Output Major Products (or by department)

FY2019 FY2020

Capacity Quantity Amount Capacity Quantity Amount

Computer Products - - 980,444,164 - - 1,026,887,774

Year Sales

FY2019 FY2020

Domestic Export Domestic Export

Quantity Value Quantity Value Quantity Value Quantity Value

Computer Products - - - 1,024,612,092 - - - 1,086,666,284

Other Electronics * 859,566 * 4,139,756 * 830,417 - 3,362,150

Total * 859,566 * 1,028,751,848 * 830,417 - 1,090,028,434

- 117 -

3. Employee Status (1) Workforce Distributions

(2) Continuing Education and Training for Employees

We established “Quanta Academy” in 2005 and renamed it to “Quanta ELITE School, QES” in early 2012 with the mission of building a comprehensive learning environment for all employees to learn and to develop. Sharpen various competencies required by employees and systematically cultivate future leaders of all levels. To ensure that every new hire can choose courses in relation to his/her own expertise upon completing the orientation training, we arranged courses in five categories, including Expertise, Leadership, Innovation, Thinking, and Entrepreneurship (ELITE) to enrich occupational knowledge of employees in work efficiency, management, technology, sales, product management, and innovation. In addition, we continuously plan and provide learning activities in the “three innovative” series to accommodate the Company’s strategy and future development. The “three innovative” series of learning activities cultivate employees’ capabilities in “innovation, creativity, and entrepreneurship”, so employees are trained to stay alert on the rapid changes in the market. From the perspective of learning in technology area, we design training courses other than cloud computing, mobile devices, IoT, and wearables, we also offer courses in response to the latest trend of market development, including self-driving, AR/VR, AI, 5G connectivity, and smart healthcare. By constantly prompting the “2B spirit”, we expect employees to proactively demonstrate self-motivation and high self-demanding attitude “to be the owner” and “to be the leader.” We also organize the “Best 2B” activity to commend the owners and leaders who best demonstrate the “2B spirit”. Through classroom learning, e-learning, On-Job Training (OJT), e-newsletters, workshops, and learning communities, we help employees to enrich their professional knowledge and skill sets. In 2020, we offered over 1,884 sessions of training with an average training length of each employee at 26.2 hours. We organized the “Wonderfour” ceremony on Teacher’s Day to award instructors and employees who have made significant contributions to internal training courses. Aside from promoting various training courses, we also made integrated planning for business model innovation, such as organizing competitions in innovation with themes

Year FY2019 FY2020 By the date of the

report's publication

No. of Employees

Direct Labor 54,279 68,945 57,776

Indirect Labor 23,651 21,950 21,786 Total 77,930 90,895 79,562

Average Age 28.39 28.47 29.26

Average Years of Service 2.89 2.62 2.98

Education Background

Ph.D. 0.09% 0.09% 0.10%

Master’s Degree 5.22% 5.18% 6.12%

Bachelor’s Degree 36.20% 24.13% 28.12%

Senior High School 28.77% 28.75% 31.11%

Below Senior High School 29.72% 41.85% 34.55%

Total 100.00% 100.00% 100.00%

- 118 -

focused on the application, internal and external innovative business models on various emerging technologies in transportation, daily life, manufacturing, engineering, education, healthcare, and entertainment.

4. Environmental Protection Expenditure

(1) Total loss, including compensation, and penalties caused by environmental pollution: Neither loss nor penalties due to environmental pollution were reported in the previous years and by the date of the report's publication.

(2) Future Countermeasures and Potential Expenditure: “Less Air Pollution, Less Water Pollution, Less Waste, and Less Environmental Impacts” is the Company’s environmental policy. To protect the Earth where we live, we ensure absolute compliance with local environmental requirements in pollutant control. Based on such a foundation, we are devoted to minimizing environmental impacts through production process improvement and legal disposal of hazardous waste. We strive to comply with the RoHS and other international environmental regulations and fulfill our corporate social responsibility. We are committed to environmental protection, as witnessed by our environmental protection expenditure. In 2020, the environmental protection expenditure in Taiwan HQ and Manufacturing HQ in China was NT$25.35 million and CNY$39.03 million respectively, and majority of our investment was in energy conservation projects and equipment. We expect the main environmental protection expenditure and environmental protection projects in the future will include expenses on the renewal and upgrading of existing energy conservation equipment, operation costs of energy conservation equipment, fees for waste disposal, and fees for environmental monitoring.

As the awareness of environmental protection rises, enterprises with outstanding environmental protection performance gain a superior position in global competitions. As a result, we have spared no effort to implement environmental protection over the years through the introduction of the environmental management system as a tool for environmental management within the Company. Our goal is to optimize environmental management performance and make voluntary and continual improvement, in order to improve the environment and reduce environmental impacts. We have established an EHS (Environmental Health & Safety) management organization at the beginning of manufacturing plant establishment. The organization is responsible for improving the EHS performance throughout the Company; plan, promote, and implement organizational EHS and risk management policies, solutions, and plans; establish EHS improvement mechanisms for the Company; and implement EHS plans and matters. To achieve total participation and to strengthen communication, we have established an EHS Management Committee in addition to the EHS unit to review and decide on the Company’s overall EHS strategies and proposals. The EHS committee holds committee meetings every month to review the Company’s EHS performance. Through the collaboration of the EHS committee from each department, we build a well-established EHS management system.

We combine environmental management programs with actual operations of the manufacturing sites to realize the execution of environmental protection. Based on the

- 119 -

Plan-Do-Check-Action (PDCA) cycle of the environmental management system, we manage environmental topics systematically, including risk consideration and assessment on various EHS topics; effective management of raw material from assessment, substitution, to reduction of feedstock and materials; the control and reduction of process pollution sources; effective management of pollutant disposal; the reuse of recyclable products. It is our goal to achieve sustainable development through implementation of all programs that help reduce environmental impacts and strengthen EHS management.

5. Labor Relations

(1) Losses due to labor dispute in the previous years and by the date of the report's publication: Since the establishment of the Company, labor relations have been developed based on mutual respect, integrity, and ethics, thus no significant labor dispute has been reported. We conduct regular and provisional labor and management meetings with the employee welfare committee to fully understand the needs of employees. We are able to develop welfare policies and resolutions for labor-management relations based on such understandings. We are committed to promote constructive labor-management relations with goals to create a healthy work environment with “Happiness, Hope, and Health” as a sustainable achievement for the Company.

(2) Estimated monetary losses from current and future labor dispute potentials and countermeasures: The Company does not expect significant monetary losses to arise from labor disputes due to the Company’s continuous and proactive efforts in promoting and implementing various employees benefit policies.

(3) Benefits:

‧ Profit sharing and stock options for employees: Implement with respect to relevant laws, regulations, and the Articles of Incorporation of the Company.

‧ The “Employee Welfare Committee” is established as required by law and the Company contributes welfare fund to the Committee on a regular basis to fund various employee benefits. In addition to the basic benefits and the 3H (health, happiness, and hope) program, we assist employees with organizing various club activities to take care of their health and leisure life.

‧ To take care of the life of employees and expand the scope of employee welfare, aside from the mandatory Labor Insurance and National Health Insurance for all full-time employees of the Company, we also provide groups insurance covering term life insurance, medical insurance for accidental injury, accidental injury insurance, hospitalization insurance, and medical insurance for cancer treatment. In addition, we have added travel insurance and occupational injury insurance to increase the coverage of extra medical and care expenses for employees in case of death, disability, injury, or disease.

‧ Upon the group insurance, we expand the coverage to the dependents of employees on a self-financed and optional basis. The coverage includes term life insurance, medial insurance for accidental injury, accidental injury insurance, hospitalization insurance, and medical insurance for cancer treatment.

- 120 -

‧ Periodic health examinations: We hire external medical center to provide medical examinations for employees on an annual basis.

‧ Employee Assistance Program (EAP): We hire external professional counselling center to offer counselling services to employees. Counselling services cover areas in occupational planning, family matters, relationships, physical and mental stress issues, and legal questions. Employees can utilize the counselling services over the phone or through face-to-face interviews and all dialogs or contents of the counselling are kept strictly confidential. Every employee is entitled to five sessions of free counselling every year. Managers can provide help to employees in need through EAP.

‧ Training courses: To meet with the Company’s long-term development needs and improve the competency of employees, we organize courses and training seminars for a wide variety of topics on technology, management, and humanities based on the learning map.

‧ We provide various monetary benefits for employees on major folk festivals, employee’s birthday, marriage, childbirth, and emergency loans.

‧ We provide employees benefits and allowances based on their needs, covering cafeteria plan selections, commercial insurance, and continuing education.

‧ We organize various activities, such as summer camps, meetups, theatrical dramas, and heath talks. We also support the development of club activities, provide financial supports to promote departmental entertainment activities to encourage employees to balance work and life and to achieve labor-management communication and harmony.

‧ We subsidize employee meals at the on-site cafeteria to take care of their health. Designated personnel is responsible to supervise the quality of foods supplied by stalls to raise the dietary standard and employee satisfaction.

‧ On-site fitness center with professional coaches are provided and fitness activities and courses are organized from time to time to improve the physical and mental health of employees.

(4) Retirement:

Aside from following regulations in accordance with the Labor Standards Act, the Company has also established “Labor Pension Fund Supervisory Committee” (tax administration number: 98039155) to provide custody and management of employee pension funds. The Company also agrees for auditing by the Taoyuan City Government Department of Labor in accordance with Letter No. 094036510 issued on December 21, 2005. Apart from conforming to the law and allocating labor pension fund to a designated account established in Bank of Taiwan as the fund source for labor pension, calculation of pension payment also conforms to the rules and regulations stipulated in the Labor Standards Act. New pension plan and the Labor Pension Act were established on July 1st,2005. Employees are entitled to choose from existing system under the Labor Standards Act or the system under the Labor Pension Act by retaining the service length before the Labor Pension Act. According to the Labor Pension Act, the Company should contribute a minimum of 6% of an employee’s salary every month to the personal pension account established by the Bureau of Labor Insurance. Records are tracked every month for employees’ queries in order to protect their rights and interests.

- 121 -

6. Material Contracts

Contract Nature

Counterparty Contract Period Major Contents Restrictions

OEM Domestic and overseas clients Within validity OEM for IT products NA

Licensing Domestic and overseas proprietors Within validity Intellectual property license NA

- 122 -

VI. Financial Information

1. Five-Year Financial Summary

(1) Consolidated Financial Statements i. Consolidated Condensed Balance Sheet – Based on IFRS

Unit: NT$ thousands

Note 1: The above financial data have been audited and certified by certified public accountants, and there is no notice of corrections or reproduction from the competent authority. Condensed individual financial statements are available below.

Note 2: No asset revaluation was performed in the above years. Note 3: Earnings distribution of the year has not been approved by the AGM.

Year

(note 1) Item

Financial Summary for The Last Five Years

2016 2017 2018 2019 2020

Current assets 532,426,459 562,682,014 600,750,831 552,745,155 604,637,657

Property, Plant and Equipment (note 2) 45,463,001 42,184,996 49,434,575 47,497,209 47,607,708

Intangible assets 682,497 748,288 849,013 832,242 829,477

Other assets (note 2) 2,146,592 1,913,533 2,237,695 1,638,388 1,723,714

Total assets 587,430,061 613,376,095 659,467,182 614,626,933 663,857,379

Current liabilities Before distribution 427,133,839 473,389,042 498,127,585 443,195,843 477,469,538

After distribution 413,614,643 460,256,109 484,415,258 428,904,122 (note 3)

Non-current liabilities 20,579,436 1,198,578 20,112,501 29,499,825 36,094,986

Total liabilities Before distribution 447,713,275 474,587,620 518,240,086 472,695,668 513,564,524


Equity attributable to shareholders of the parent

132,853,434 132,422,343 134,896,686 135,641,811 144,359,658

Capital stock 38,626,274 38,626,274 38,626,274 38,626,274 38,626,274

Capital surplus 14,053,893 14,072,745 14,085,280 14,090,564 14,102,181

Retained earnings Before distribution 85,257,190 86,043,777 88,240,188 90,494,982 101,464,401


Other equity interest (4,750,829) (5,987,359) (5,721,962) (7,236,915) (9,500,104)

Treasury stock (333,094) (333,094) (333,094) (333,094) (333,094)

Non-controlling interest 6,863,352 6,366,132 6,330,410 6,289,454 5,933,197

Total equity Before distribution 139,716,786 138,788,475 141,227,096 141,931,265 150,292,855


- 123 -

ii. Consolidated Condensed Statement of Comprehensive Income – Based on IFRS Unit: NT$ thousands

Note 1: The above financial data have been audited and certified by certified public accountants, and there is no notice of corrections or reproduction from the competent authority. Condensed individual financial statements are available below.

Note 2: There’s no income from discontinued operations reported in the above years.

Year (note 1) Item


2016 2017 2018 2019 2020

Operating revenue 893,982,294 1,021,182,900 1,027,991,038 1,029,611,414 1,090,858,851

Gross profit 46,594,261 45,653,186 43,871,961 49,167,659 63,969,396

Income from operations 19,105,254 17,605,965 14,295,496 18,990,906 32,450,504

Non-operating income and expenses 1,235,321 2,491,127 4,880,913 1,560,715 1,981,295

Income before tax 20,340,575 20,097,092 19,176,409 20,551,621 34,431,799

Profit (loss) from continuing operations 15,410,434 14,515,762 15,332,361 16,314,805 25,390,060

Income from discontinued operations, net of income tax effect (note 2)

- - - - -

Net income (Loss) 15,410,434 14,515,762 15,332,361 16,314,805 25,390,060

Other comprehensive income (income after tax)

(520,122) (1,537,903) 475,468 (1,611,098) (2,455,796)

Total comprehensive income 14,890,312 12,977,859 15,807,829 14,703,707 22,934,264

Net income attributable to shareholders of the parent

15,138,164 14,367,092 15,118,553 15,942,712 25,327,631

Net income attributable to non-controlling interest

272,270 148,670 213,808 372,093 62,429

Comprehensive income attributable to Shareholders of the parent

14,854,686 13,069,253 15,594,741 14,452,168 22,997,951

Comprehensive income attributable to non-controlling interest

35,626 (91,394) 213,088 251,539 (63,687)

Earnings per share 3.93 3.73 3.92 4.14 6.57

- 124 -

(2) Individual Financial Statements i. Individual Condensed Balance Sheet – Based on IFRS

Unit: NT$ thousands

Note 1: The above financial data have been audited and certified by certified public accountants, and there is no notice of corrections or reproduction from the competent authority.

Note 2: No asset revaluation was performed in the above years. Note 3: Earnings distribution of the year has not been approved by the AGM.

Year (note 1)

Item


2016 2017 2018 2019 2020

Current assets 389,998,313 399,960,923 409,842,621 408,855,857 361,234,019

Property, Plant and Equipment (note 2) 8,094,840 8,093,124 13,543,653 15,999,587 17,476,324

Intangible assets 29,481 31,975 49,043 75,682 73,608

Other assets (note 2) 10,667 11,239 48,796 65,420 81,820

Total assets 429,429,425 438,374,109 459,745,366 466,150,760 470,783,856

Current liabilities Before distribution 281,035,079 300,671,211 309,756,940 304,098,184 304,827,857


Non-current liabilities 15,540,912 5,280,555 15,091,740 26,410,765 21,596,341

Total liabilities Before distribution 296,575,991 305,951,766 324,848,680 330,508,949 326,424,198


Equity attributable to shareholders of the parent 132,853,434 132,422,343 134,896,686 135,641,811 144,359,658

Capital stock 38,626,274 38,626,274 38,626,274 38,626,274 38,626,274

Capital surplus 14,053,893 14,072,745 14,085,280 14,090,564 14,102,181

Retained earnings Before distribution 85,257,190 86,043,777 88,240,188 90,494,982 101,464,401


Other equity interest (4,750,829) (5,987,359) (5,721,962) (7,236,915) (9,500,104)

Treasury stock (333,094) (333,094) (333,094) (333,094) (333,094)

Non-controlling interest - - - - -

Total equity Before distribution 132,853,434 132,422,343 134,896,686 135,641,811 (9,500,104)


- 125 -

ii. Individual Condensed Statement of Income – Based on IFRS Unit: NT$ thousands

Note 1: The above financial data have been audited and certified by certified public accountants, and there is no notice of corrections or reproduction from the competent authority.

Note 2: There’s no income from discontinued operations reported in the above years.

(3) Auditors’ Opinions from 2016 to 2020

Year CPAs Audit Opinion

2016 Wan-Wan Lin & Liu-Fong Yang Unqualified opinion





Year (note 1) Item


2016 2017 2018 2019 2020

Operating revenue 863,452,459 988,566,371 988,549,563 969,098,701 1,017,933,510

Gross profit 38,721,724 35,458,363 30,610,727 38,002,770 51,121,521

Income from operations 21,628,238 17,408,966 12,577,284 17,816,099 22,782,070

Non-operating income & expenses (4,051,746) (97,380) 4,256,650 250,699 3,239,226

Income before tax 17,576,492 17,311,586 16,833,934 18,066,798 31,578,677

Net income for continuing operations 15,138,164 14,367,092 15,118,553 15,942,712 25,327,631

Income from discontinued operations, net of income tax effect (note 2)

- - - - -

Net income 15,138,164 14,367,092 15,118,553 15,942,712 25,327,631

Other comprehensive income for the year, net of tax

(283,478) (1,297,839) 476,188 (1,490,544) (2,329,680)

Total comprehensive income for the year 14,854,686 13,069,253 15,594,741 14,452,168 22,997,951

EPS 3.93 3.73 3.92 4.14 6.57

- 126 -

2. Five-Year Financial Analysis (1) Consolidated Financial Analysis – Based on IFRS

Note 1: The above financial analysis has been audited by CPAs Note 2: Calculation for each financial analysis is as follows:

(1) Financial Ratio A. Total liabilities to Total assets＝Total liabilities／Total assets

B. Long-term fund to property, plant and equipment＝(Net equity＋Non-current liabilities)／Net

property, plant and equipment (2) Ability to Pay off Debt

A. Current ratio＝Current Assets／Current liability

B. Quick ratio＝(Current assets－Inventory－Prepaid expenses)／Current liability

C. Interest protection＝Net income before income tax and interest expense／Interest expense

(3) Ability to Operate A. Account receivable (including account receivable and notes receivable from operation) turnover＝Net

sales／the Average of account receivable (including account receivable and notes receivable from

operation) balance B. A/R turnover day＝365／account receivable turnover

C. Inventory turnover＝Cost of Goods Sold／the average of inventory

D. Account payable (including account payable and notes payable from operation)turnover＝Cost of goods

sold／the average of account payable (including account payable and notes payable from operation)

balance E. Inventory turnover day＝365／Inventory turnover

Year (note 1) Item

Financial Analysis for the Last Five Years

2016 2017 2018 2019 2020

Financial structure (%)

Debt Ratio 76.22 77.37 78.58 76.91 77.36

Ratio of long-term capital to property, plant and equipment

350.12 329.21 323.19 336.37 368.62

Solvency (%)

Current ratio 124.65 118.86 120.60 124.72 126.63

Quick ratio 95.40 89.86 92.79 96.70 94.75

Interest earned ratio (times) 9.95 6.01 3.99 4.08 17.37

Operating performance

Accounts receivable turnover (times)

5.37 5.96 5.45 5.06 5.44

Average collection period 68.16 61.24 66.97 72.13 67.28

Inventory turnover (times) 6.93 7.58 7.25 7.58 7.56

Accounts payable turnover (times)

5.26 5.79 5.85 6.02 6.01

Average days in sales 52.81 48.15 50.34 48.15 48.41

Property, plant and equipment turnover (times)

19.66 24.21 20.79 20.38 21.92

Total assets turnover (times) 1.52 1.66 1.56 1.68 1.64

Profitability (%)

Return on total assets 3.09 2.97 3.22 3.40 4.24

Return on stockholders' equity 11.02 10.42 10.95 11.52 17.38

Percentage of paid-in capital

Operating Income

49.46 45.58 37.01 49.17 84.01

Pre-tax income 52.66 52.03 49.65 53.21 89.14

Profit ratio 1.72 1.42 1.49 1.58 2.33

Earnings per share (NT$) 3.93 3.73 3.92 4.14 6.57

Cash flow (%)

Cash flow ratio 11.00 (note3) 3.42 8.51 16.34

Cash flow adequacy ratio 100.33 65.35 42.79 68.31 107.11

Cash reinvestment ratio 16.39 (note 3) 1.80 11.23 28.12

Leverage Operating leverage 1.48 1.49 1.66 1.57 1.29

Financial leverage 1.13 1.30 1.82 1.54 1.07

- 127 -

F. Fixed assets turnover＝Net sales／Net Fixed Assets

G. Total assets turnover＝Net sales／Total assets

(4) Earning Ability A. Return on assets＝［PAT＋Interest expense × (1－effective tax rate)］／the average of total assets

B. Return on equity＝PAT／the average of net equity

C. Net income ratio＝PAT／Net sates

D. EPS ＝(Profit attributable to owners of the Company－ Dividend from prefer stock)／weighted average

outstanding shares (5) Cash Flow

A. Cash flow ratio＝Cash flow from operating activities／Current liability

B. Cash flow adequacy ratio＝Most recent 5-year Cash flow from operating activities／Most recent 5-year

(Capital expenditure＋the increase of inventory＋cash dividend)

C. Cash investment ratio＝(Cash flow from operating activities－cash dividend) ／(Gross property, plant

and equipment＋long-term investment＋other non-current assets＋working capital)

(6) Leverage A. Operating leverage＝(Nest revenue－variable cost of goods sold and operating expense)／operating

income B. Financial leverage＝Operating income／(Operating income－interest expenses)

(7) When evaluating the above calculation for EPS, the following factors must be taken into consideration:

The number of common shares shall be based on the weighted average method and not the outstanding shares as of the end of the year.

In the event of capital increase through issuance of new shares or treasury shares trade, the outstanding period of shares shall consider the weighted average number of outstanding shares in calculation.

In the event of capitalization through retained earnings or capital surplus, adjustment shall be made in proportion to the amount capitalized when calculating the earning per share for the previous year and the interim period. The term of the capitalization through retained earnings or capital surplus for new capital is not required for consideration.

If the preferred shares are non-convertible accumulated preferred shares, dividends for current period (whether or not being paid out) should be deducted from earning or added to earnings after tax. If the preferred shares are not accumulative, dividends for preferred shares should be deducted from earnings if there is a surplus. No adjustment is required in the event of losses.

(8) When analyzing cash flow, the following should be noted:

Cash flow from operation shall refer to the net cash inflow from operation as stated in the statements of cash flow.

Capital expenditure shall refer to cash outflow for capital investment each year. Addition to inventory shall refer to the value at the ending period is greater than that of the beginning

period. The number should be zero if there is decease in inventory. Cash dividend includes cash dividend for common and preferred stocks. The gross amount of property, plant, and equipment is the total balance of property, plant, and

equipment before subtracting accumulated depreciation.

(9) Issuers shall divide the costs and expenses from operations by nature into fixed and variable cost. Issuers shall pay attention to the fairness and consistency if estimates or subjective judgement is involved.

(10) If the company’s stocks do not have a par value or the par value is other than NT$10, the calculation of

percentage of paid-in capital should be calculated with the ratio of equity attributable to the parent company stated in the balance sheet.

Note 3: The ratio is a negative number.

- 128 -

(2) Individual Financial Analysis – Based on IFRS

Notes: same as previous chart

Year (note 1) Item (note 2)

Financial Analysis for the Last Five Years

2016 2017 2018 2019 2020

Financial structure (%)

Debt Ratio 69.06 69.79 70.66 70.90 69.34

Ratio of long-term capital to property, plant and equipment

1,775.38 1,636.76 1,082.72 965.03 926.98

Solvency (%)

Current ratio 138.77 133.02 132.31 134.45 118.50

Quick ratio 127.34 118.05 121.77 123.89 106.68

Interest earned ratio (times) 16.26 10.68 7.58 5.88 28.13

Operating performance

Accounts receivable turnover (times)

4.31 4.74 4.42 4.16 4.93

Average collection period 84.92 77.00 82.58 87.74 74.24

Inventory turnover (times) 22.06 24.76 24.80 28.82 28.76

Accounts payable turnover (times) 6.48 7.23 8.02 11.14 19.83

Average days in sales 16.59 14.74 14.72 12.66 12.73

Property, plant and equipment turnover (times)

106.67 122.15 72.99 59.95 57.94

Total assets turnover (times) 2.01 2.26 2.15 2.08 2.16

Profitability (%)

Return on total assets 3.81 3.65 3.82 4.08 5.61

Return on stockholders' equity 11.40 10.83 11.31 11.79 18.09

Percentage of paid-in capital

Operating Income 55.99 45.07 32.56 46.12 73.37

Pre-tax income 45.50 44.82 43.58 46.77 81.75

Profit ratio 1.75 1.45 1.53 1.65 2.49

Earnings per share (NT$) 3.93 3.73 3.92 4.14 6.57

Cash flow (%)

Cash flow ratio 11.88 (note 3) 6.76 (note 3) 47.01

Cash flow adequacy ratio 132.48 118.28 129.00 78.43 174.01

Cash reinvestment ratio 12.52 (note 3) 5.12 (note 3) 103.37

Leverage Operating leverage 1.03 1.03 1.05 1.07 1.06

Financial leverage 1.06 1.11 1.26 1.26 1.04

- 129 -

3. Audit Committee’s Review Report


Audit Committees’ Review Report

30th March, 2021

The Board of Directors has prepared and submitted to us the Company's 2020 business report, financial statements and proposal for allocation of distributable earnings. FY2020 financial statements have been audited and certified by KPMG. The business report, financial statements and allocation of distributable earnings proposal have been reviewed by the Audit Committee. We, the Audit Committee, have duly examined the same as correct and accurate. We hereby report to the 2021 Annual General Meeting of Shareholders in accordance with Article 14-4 of the Securities and Exchange Act as well as Article 219 of the Company Act.

Quanta Computer lnc.

Chairman of the Audit Committee : Wei-Ta Pan (潘維大)

4. Consolidated Financial Statements Please refer to consolidated financial statements disclosed on MOPS or Company’s website

5. Individual Financial Statements Please refer to individual financial statements disclosed on MOPS or Company’s website

6. Financial Difficulties: NA

- 130 -

VII. Review of Financial Position, Analysis of Financial Performance and Risk Management

1. Analysis of Financial Status (1) Analysis of Financial Status

Unit: NT$ thousands

(2) Description of items with significant changes (changes over 20%):

Non-current liabilities: increased from the previous year due to newly added syndication loan, thus the amount of long-term borrowing was higher

Other adjustments: decreased from the previous year due to reduction in foreign exchange differences from converting net assets of overseas operating entities.

(3) Influence of significant financial changes in the past two years and future

countermeasures: From the above analysis, changes in the financial difference in the past two years do not significantly impact the statement of financial position.

Year

Item 2019 2020

Difference Analysis of Changes

Amount %

Current Assets 552,745,155 604,637,657 604,637,657 9.39%

Fixed Assets 47,497,209 47,607,708 47,607,708 0.23%

Intangible Assets 832,242 829,477 829,477 -0.33%

Other Assets 1,638,388 1,723,714 1,723,714 5.21%

Total Assets 614,626,933 663,857,379 663,857,379 8.01%

Current Liabilities 443,195,843 477,469,538 477,469,538 7.73%

Long-term Liabilities 29,499,825 36,094,986 36,094,986 22.36% (note 2)

Total Liabilities 472,695,668 513,564,524 513,564,524 8.65%

Total equity attributable to owners of parent

135,641,811 144,359,658 144,359,658 6.43%

Share capital 38,626,274 38,626,274 38,626,274 0.00%

Capital surplus 14,090,564 14,102,181 14,102,181 0.08%

Retained Earnings 90,494,982 101,464,401 101,464,401 12.12%

Other Adjustments (7,236,915) (9,500,104) (9,500,104) 31.27% (note 2)

Treasury shares (333,094) (333,094) (333,094) 0.00%

Non-controlling interests 6,289,454 5,933,197 5,933,197 -5.66%

Total Stockholders' Equity 141,931,265 150,292,855 150,292,855 5.89%

- 131 -

2. Analysis of Operation Results (1) Analysis of Operation Results

Unit: NT$ thousands

Note: Analysis and description of ratio changes (for changes over 20%): Note 1. Gross Profit:

Increase in gross profit was a result of revenue growth and adjustment in business mix, increase in high ASP product shipment along with scale benefits from significant NB shipment growth.

Note 2. Operating Income: Increase in operating income from the previous year was mainly due to improvement in product mix with better margin profile, stringent cost control, and reduced administrative expenses.

Note 3. Non-Operating Income & Expenses: Lower interest rate led to lower interest expenses compared to the previous year. Note 4. Income before tax, profit (loss) from continuing operations, EPS, total comprehensive income: Significant improvement as a result of above stated reasons. Note 5. Other comprehensive income, net:

Reduced YoY due to the exchange differences on translation of foreign operations’ financial statements as a result of exchange rate fluctuation.

(2) Business forecast in the next year

i. Expected sales and basis: In 1Q 2021, the revenue was NT$269 billion, and about 19 million NBs were shipped. The demand derived from epidemic prevention measures continues to boost business opportunities related to WFH, remote learning, online consumption and entertainment. While the new wave of "home economy" remains an ascendant trend, new economic models are also emerging as new business opportunities. The growing maturity of broadband and cloud infrastructure deployment further accelerated the development of innovative applications in smart medical services and autonomous drive. These drivers are expected to support the steady growth of Quanta's cloud computing business and further benefit the end demand for notebook computers that offer productivity.

Year

Item 2019 2020

Difference Analysis of

Changes Amount %

Net Sales 1,029,611,414 1,090,858,851 61,247,437 5.95%

Gross Profit 49,167,659 63,969,396 14,801,737 30.10% (note 1)

Operating Income 18,990,906 32,450,504 13,459,598 70.87% (note 2)

Non-operating Income and Expenses 1,560,715 1,981,295 420,580 26.95% (note 3)

Income Before Tax 20,551,621 34,431,799 13,880,178 67.54% (note 4)

Profit (loss) from continuing operations 16,314,805 25,390,060 9,075,255 55.63% (note 4)

Income from discontinued operations, net of income tax effect

- - - - -

Net Income 16,314,805 25,390,060 9,075,255 55.63% (note 4)

Other comprehensive income, net (1,611,098) (2,455,796) (844,698) 52.43% (note 5)

Total Comprehensive Income for the year 14,703,707 22,934,264 8,230,557 55.98% (note 4)

EPS 4.14 6.57 2.43 58.70% (note 4)

- 132 -

ii. Potential influences on future finance position and countermeasures: To maintain long-term growth momentum, reduce over-dependency on specific regions, prevent potential high tax risk, and respond to customer demands, we carefully assess operational resources, review and adjust our global strategic deployment, in order to deal with the structural change in the global economic and political situations and to ensure long-term competitive strength for a better foundation of sustainable development. Our current production bases include Taiwan, mainland China, the U.S., Europe, and South East Asia.

Through diversifying production plants and increasing the mobility of local production capacity, we have effectively diminished the risk associated with overly concentrated production base. Our manufacturing sites in Taiwan have the geographical advantage of proximity to our R&D headquarters, which enables us to closely integrate R&D with production to achieve the synergy of “Time to MP (Mass Production)” and thereby accelerate our process of innovation. At the same time, we have introduced “Industrial 4.0” in our production plants for reasonable, automated and smart processes to gradually increase the adoption of automated production and to further enhance plant efficiency. Quanta continues to improve the engineering skillset in product manufacturing coupled with our innovative capability through R&D talents, we have redefined the next-generation of “Made in Taiwan” to provide products and services with higher value-add to the market.

3. Analysis of Cash Flow

(1) Liquidity of the year Unit: NT$ thousands

1. The operating cash inflow was NT$78,004,973,000 due to increase in operating profit and positive net changes in asset and liability from operational related activities.

2. The investing cash outflow was NT$21,856,384,000 due to the acquisitions of property, plant, and equipment (PP&E) as well as increase in financial assets at fair value through profit or loss.

3. The financing cash outflow was NT$33,522,664,000 due to the decrease in short-term borrowing and repayment of long-term debts.

4. Cash and cash equivalents decreased as a result of volatility in exchange rate leading to less foreign exchange gains from assets denominated in USD compared to the previous year.

Year Item 2019 2020

Difference

Amount Ratio (%)

Cash and Cash Equivalents, Beginning of Year 211,281,084 192,605,577 (18,675,507) -8.84%

Net Cash Flow from Operating Activities 37,734,664 78,004,973 40,270,309 106.72%

Net Cash Flow from Investing Activities 1,805,472 (21,856,384) (23,661,856) -1310.56%

Net cash flows from financing activities (53,546,740) (33,522,664) 20,024,076 -37.40%

Effect of exchange rate changes on cash and cash equivalents

(4,668,903) (7,860,536) (3,191,633) 68.36%

Net increase (decrease) in cash and cash equivalents

(18,675,507) 14,765,389 33,440,896 -179.06%

Cash and Cash Equivalents, End of Year 192,605,577 207,370,966 14,765,389 7.67%

- 133 -

(2) Improvement plans for liquidity shortfall and liquidity analysis of the next year: There is no report of liquidity shortfall.

4. Major Capital Expenditure Items and Impact on Financial and Business

The Company’s strategic deployment focused on “R&D and innovation” and “manufacture upgrading.” Important capital expenditure plans were implemented based on these two themes. So far, we have established production sites in Taiwan, mainland China, the U.S., Europe, and Southeast Asia. We’ve recently expanded production lines in Hwa Ya Technology Park and further expanded capacity in Taiwan to manufacture products with high ASP and high value-add. We’ve also built production sites in Thailand to manufacture labor-intensive products. Through proper diversification of our production sites in Taiwan and Southeast Asia, we helped customers to mitigate the tariff risk from US-China trade war and enhanced the flexibility of our sales force to offer diversified production sites for customers when bidding for orders.

5. Re-Investment Policies (1) Re-investment policy and re-investment plan in the next year

We make re-investments after overall consideration of the needs for business growth, customer’s overseas expansion, vertical integration and carefully assess investment plans based the Company’s long-term strategy. The major investment projects and plans will cover the following areas: ‧ Investments related to cloud computing and AI: Actively seek appropriate partners and

suitable targets for technological cooperation, market cultivation, strategic alliance, investments, and joint venturing to expand the territory of our cloud computing business and accelerate the development of new AI applications in different vertical markets.

‧ Investments for the capitalization and expansion needs of the Company and overseas subsidiaries: Apart from offering proximate services for customers, we make appropriate resources allocation in consideration of operational needs, such as future business expansion, cost reduction, and risk diversification. We also make adjustments corresponding to market changes.

‧ Key materials and technologies: To increase control over key components, parts and related technologies, the scope of investment will cover the parts, components, key materials and technologies of existing products and products with future developmental potential, in order to synergize vertical integration and enhance competitiveness.

‧ Green energy industries: By increasing investments in green energy, we can develop energy conservation and waste reduction technologies and green energy technologies to implement the CSR policy and facilitate sustainable environment.

‧ Others: We support the development projects of emerging technologies, invest in startups that develop emerging technologies and others.

(2) Major cause(s) of gains and losses from reinvestment

We make reinvestments with the equity method for a long-term strategic goal to either complement or synergize Quanta with the entities in emerging technology development of business cultivation, in order to create complementary and multifaceted synergies

- 134 -

(including but not limit to direct financial returns). In 2020, a total of NT$49,112,000 was recognized as the loss from reinvestments through the equity method. In the future, we will continue to make long-term investments with careful assessment of reinvestment plans.

6. Analysis of Risk Management

(1) Influence on the corporate income of changes in the interest rate and exchange rate and inflation, and future counter measures:

i. Influence on corporate income: Unit: NT$ thousand

ii. Future countermeasures: A. Interest rate and inflation:

We have a well-established financial structure. In loan interest rate, we will maintain closer contact with banks and keep track of the trend of interest rate to strive for the most favorable loan interest rate. In the utilization of short-term idle funds, low-risk bank deposits, secure commercial papers, and bond funds will be the common investment instruments. Both interest rate and inflation will have little influence on the corporate income.

B. Exchange rate:

As we export products primarily to Europe and the U.S., products are usually quoted in USD, and the international trend of USD is indispensable to our exchange gains and losses. Due to the global economic and political instabilities, apparent recovery of the global economy has not been seen yet, we thus take the following actions to reduce exchange rate risk:

a. Specify the operating strategy of foreign exchange and maintain strict process control to monitor changes in the exchange rate.

b. Gather information regarding exchange rate changes at all times and maintain close contact with banks to fully capture the exchange rate trend and timely adjust the foreign currency position to hedge exchange rate risk.

c. Consider exchange rate in sales quotations for reasonable profit of the Company.

(2) Policies, main reason(s) for profits or losses, and future countermeasures for engaging

in high-risk and high-leverage investments, lending, offering guarantees and endorsements, and derivatives investments:

i. Our operations focus on R&D, manufacturing, and sales, and we do not engage in high-risk and high-leverage investments.

Item 2020

Amount As % of Revenues As % of pre-tax Profits

Interest Income (Expense) 2,039,645 0.19% 5.92%

Foreign Exchange Gain (Loss) 246,479 0.02% 0.72%

- 135 -

ii. We are conservative in financial stance and have never engaged in high-risk and high-leverage investments of any kind. When offering lending, endorsements, and guarantees or engaging in derivatives investments, the purpose will be mainly for hedging operational risk. All hedging strategies are aim to avoid risk from business operations. Risk management is implemented with regularly assessed control system. Apart from careful assessment, we perform regular audits and disclose and report the results by law based on the regulations of the competent authority and the Company.

iii. We proceed with lending, endorsement, and guarantee in accordance with the Company’s “Procedures for Lending Funds to Other Parties, and Endorsements & Guarantees”.

iv. Derivatives are invested to hedge operational risk and exchange risk. In addition, we have established the “Acquisition and Disposal of Assets Procedure” for implementing derivatives investments.

(3) Future R&D projects and planned R&D expenditure: i. Strategy and goals of innovation and R&D

Adhering to the “Making Tools for AI” as innovation and R&D strategy, we can quickly combine the application ecosystem of big data management to produce complete artificial intelligence solutions based on the mature technologies of “new 3C” (cloud computing, connectivity, and client devices), mature products, and mature business models. With these AI solutions, we can offer total solutions with market advantages to areas including consumer/commercial/industrial IoT; smart manufacturing, autonomous vehicle; smart hospital; telemedicine and remote healthcare; and 5G applications. Apart from continuous engagement of innovation and R&D in the above areas, we further enhance the development of “3S”- software, service, and system integration, hoping to quickly respond to market demands, become an industry-leading system solution provider, and realize the core belief “humanized automation service” to provide customers with the best product and service value. From the “new 3C”, big data management to AI, we integrate the advanced technology tools to various product lines and thus are able to propose integrated solutions that are superior to that of competitors to help realize “3A Coverage” - enabling uninterrupted access of various smart services over the cloud at anytime and anywhere by anyone.

ii. R&D plans in recent years:

The R&D project currently in progress is to develop a platform as a total smart solution for integrating resources with AI healthcare and IoT. With cloud computing technology, we develop an architecture suitable for massive deployment of data centers, including the collaborative operation and parallel processing of high-performance heterogeneous platforms, high-speed network virtualization technology, high-speed disk cache technology, and integrated management technologies. Apart from the flexible planning of healthcare systems in different scales, this platform supports high availability and fast failure recovery to reduce hardware redundancy needs. Cloud technologies in development include the “telemedicine cloud system”, “remote healthcare system”, “smart ECG/EKG”, “smart multimedia system”, and “5G technology”. We will integrate

- 136 -

our advanced technologies in servers, wireless networks, and client devices to develop integrated solutions superior to that of competitors.

For smart hospitals, we continue to strengthen the “smart ward cloud caring system” that includes the “smart healthcare infotainment terminal”, “smart medical cart”, and “smart nurse station whiteboard”, and the corresponding private cloud platforms for seamless connect with existing healthcare IT systems of hospitals. We’ve also launched the brand new “Artificial Intelligence Platform System” in 2019 to provide hospitals with a high-performance AI management platform for precision medicine with outstanding structured data and AI training management. For remote medical care, we have adjusted the functions of smart medical carts to combine cloud computing technology and 5G technology to build collaborative diagnosis system that timely integrates inter-hospital data and emergency transportation systems. In addition, we provide customized solutions tailor made to different customers’ requirements, including “Smart Remote Health Care System” and a full range of smart wearable devices, as well as a complete remote medical care management solution that integrates private cloud platforms, machine learning, big data analysis, and application software. In AIoMT, we continue to develop advanced and optimized smart wearables/diagnostic devices such as the “smart ECG/EKG”, “smart wireless intraoral camera”, and “smart wireless otoscope” equipped with various autonomous management functions. By integrating AI, AR, and VR technologies, these solutions offer scalability and value-added services based on actual needs for hospitals and for homes through highly-integrated hardware and software designs and the cloud-based architecture. They also integrate and analyze huge clinical data for developing smart applications to help make medical decisions, enhance healthcare service efficiency, reduce workload of medical personnel, reduce medical costs, improve care quality, and thereby create greater long-term commercial value. Based on goal of “precision medicine”, the “smart ECG/EKG” leverages AI technology to offer all round medical services by realizing the “4P”: “participate”, “personalize”, “predict”, and “prevent”. With handy and durable designs, the “smart ECG/EKG” is suitable for use in many scenarios. Through the collaboration of edge computing and cloud computing, the “smart ECG/EKG” brings a major change in the care pattern of cardiovascular diseases. Apart from simplifying clinical processes and optimize telecare experience, it realizes the vision of AIoMT -- “prevention of illness and prevention of disease course changes”. In addition, it integrates people (patients and clinical healthcare personnel), data (patient data or treatment result data), process (healthcare services and patient support services), and key technologies (interconnected medical devices and apps) to provide effective medical alert or improve treatment. In addition, the “Heart and Lung Sounds Auscultation Device” in development will become the best tool for remote medical care and long-term homecare. The device combines AI-assisted analysis and online consultation functionalities, so that the heart and lung sounds and the health condition of patients suffering from cardiopulmonary

- 137 -

diseases can be continuously monitored and captured at all times for early cure and to prevent patients from missing the best time for treatment. In view of the demand for services in relation to the production, manufacture, storage, and distribution of digital contents is rising, we have started the “multimedia system” development on the cloud platform. Key initiatives include the research and development on heterogeneous multicore processor, technology for setting up a multimedia cloud, and planning the optimal design of hardware combination based on the characteristics of processor algorithm. The system is also equipped with the scalable cloud computing architecture for multimedia encoding and decoding process. Together with the computer vision algorithm, the system can be used for big data analysis and processing in relation to massive multimedia, which has become a global trend. In “5G technology” development, as 5G will reshape the operational model of all industries in relation to smart city, smart manufacturing, and smart living, it has become the most concerned and the most influential technology that is different from the past network architectures. With NFV and SDN, 5G separates hardware from software. It combines hardware with open source software for managing large data transmission and reducing network deployment cost significantly. Therefore, 5G technology is characterized by its high frequency, broad bandwidth, high speed, and low latency. Its three main application scenarios are: ‧ Enhanced Mobile Broadband (eMBB) : Enhance network coverage and

traffic/bandwidth to support larger and faster data transmission, such as AR and VR requiring intensive computing.

‧ Big IoT application services or eMTC (Massive Machine Type Communications): Smart home and smart city.

‧ Key business services: Autonomous vehicle, Industrial 4.0, and smart healthcare.

Based on the existing foundation of cloud technology and cloud product development, we expand product offerings from cloud computing to the “central office equipment” market. Ridding the traditional OEM/ODM model, we keep close cooperation with the key technology partners and customers in the 5G ecosystem, and actively engage in research and development in CORD and participate in the ecosystem of open platform for NFV (OPNFV). Apart from acquiring NFVI certification from Intel for related products, we have introduced a range of 5G infrastructure solutions for telcos and ISPs. In addition, we provide NFVI optimized platforms in carrier class and offer SDN solutions based on Intel Architecture (IA) system performance consistency to fulfill the demand for high network performance and low latency of telcos.

Mobile data traffic will increase rapidly, making exiting Marcocell-based traditional cellular networks unable to support the high traffic loads. As there are other problems including the difficulty of site location selection, high construction cost, and signal coverage, the connection architecture of mobile broadband is on transit to the heterogeneous network architecture design integrating large and small base stations. On the base of current connectivity technology, we aggressively develop small cells that can enhance signals in specific areas and divert network traffic. With our advantages in

- 138 -

hardware and software R&D, system integration, and manufacturing capacity, we turn small cells into key equipment for full-range signal extension and in-depth coverage to address the needs for 5G mobile telecommunication, increase the bandwidth and network speed for personal and business users, support mass smart networks, and enhance indoor signal coverage. In client device, VR devices have a lower cost and faster popularization, while AR devices have a board scope of application and are more practical. Apart from entertainment, VR applications have gradually expanded towards the enterprise level covering education, healthcare, and the manufacturing industries. AR and VR have been used in the media, education, work, social media, travel, and retail. However, present VR devices often make users feel uncomfortable and dizzy. As huge traffic arises from vision change and image quality enhancement in a virtual reality application, and the 4G network can neither support such a data transmission speed nor reduce the latency time to prevent users from dizziness. The broad bandwidth, high transmission rate, and low latency characteristics of 5G are the key to success of VR technology development. AR devices are penetrative and can be the next-generation mobile platform. Therefore, apart from continuing VR device development, we actively engage in the R&D of AR devices to deploy various technologies on different platforms. Our development focus includes: ‧ Early collaborative development and shared platform development of AR core

chipsets. ‧ Collaborative development of new technology and commodification with

suppliers of different types of waveguides. ‧ Early strategic alliances of important light source and the next-gen display

chipsets. ‧ Establishment of the key technologies in AR, including the reconstruction and

voice recognition of six degrees of freedom, depth detection, and 3D space. ‧ Co-development with important suppliers in social media, instant message, and

cloud service providers to develop products that meet market demands.

iii. Estimated R&D expenditure: We invest one percent of the revenue as the R&D expenditure every year. The amount increases every year. The estimated amount for R&D investment is expected to exceed NT$17 billion in 2021. Centered around Quanta Research Institute to strengthen talents recruitments, continue to invest resources in innovative research and development in order to establish the Company’s long-term competitive edge.

iv. Major factors affecting R&D success in the future:

“Time to End User, Time to Volume, Time to Market, and Time to Technology” are our core competencies and based on which we maintain leaderships in the market and technology development. Strong capability in technology R&D and customization will be the driving force to maintain our leadership position in the future market. By building and utilizing infrastructure for knowledge management, we continuously create, transform, and integrate these forces as the power that drives constant growth and sustainable

- 139 -

development. Therefore, factors which impact on our core competencies and growth forces will be the major factors affecting our R&D success in the future. Quanta has established “Knowledge and Innovation Management System” which includes “the innovation and R&D assistance system”,” e-learning system”, “product data management system”, “Quanta knowledge management platform” as the core of knowledge and innovation management. Factors affecting the “innovation and R&D assistance system” include: provision, promotion, and utilization of innovation assistance tools and innovation skills; training for innovation and R&D personnel; strategy planning for innovation and R&D; and the integration of innovation and R&D with the market environment. Factors affecting the “e-learning system” include: the development of teaching methods and teaching contents; dissemination of teaching contents, and learning experience management. Factors affecting the “Quanta knowledge management platform” include: user interface, technology for interlanguage analysis, rapid knowledge sharing, and effective knowledge accumulation. Factors affecting the “product data management system” include product development process control, material control, EC control, document digitization, and product record management. Other factors include: SOP control, integration of internal database and technical document database, technology analysis and strategy planning, and integration of innovation, R&D and management.

(4) Influence of significant changes in policies and laws at home or abroad on finance position and business operations and countermeasures: We keep close track on any policies and laws that may affect operations and adjust related internal systems accordingly to ensure legal compliance.

(5) Influence of technology and industry changes on finance position and business operations and countermeasures: There was no report of influence of technology and industry changes on finance position and business operations in the previous year.

(6) Influence of corporate image change on crisis management and countermeasures: There was no report of influence of corporate image change on crisis management in the previous year.

(7) The expected benefits and potential risks of mergers and acquisitions: No merger or acquisition was performed in the previous year.

(8) The expected benefits and potential risks of factory expansion and countermeasures: Expande production capacity in the Hwa Ya Technology Park in Taiwan, including expansion of QC1, establishment of production capacity in QC2, QAT (Dong Yuan Plant), as well as new construction of the Third Production Plant. The newly established production plant in Thailand continues to expand at a steady pace and demonstrates production efficiency. At the same time, the Company continues to optimize our current production and service facilities in Asia, America, and Europe to successfully establish R&D and manufacturing site that is centered around Taiwan to

- 140 -

provide the best manufacturing and service solutions in a timely manner in response to the dynamic needs of our customers and the market.

The expected benefits, potential risks, and countermeasures of plant expansion are summarized as follows: 1. Expected benefits ‧ Provide customers with better choices and services through comprehensive

deployment strategies and construction of high-efficiency production bases. ‧ Enhance our responsiveness to production sites to address the unfavorable

impacts on the complex global supply chain and changes on global economy brought upon by the trade war.

‧ Strengthen competitiveness and secure long-term relationship with customers. ‧ Reduce production cost to enhance competitive strength.

2. Potential risks ‧ Potential risks associated with establishing manufacturing sites in new regions

may include cultural differences and regional risks. ‧ Supply constaint in logistics and the supply chain due to the COVID-19.

3. Countermeasures ‧ Implement “Industrial 4.0” in our production plants for reasonable, automated

and smart processes to gradually increase the adoption of automated production and to further enhance plant efficiency.

‧ Increase the mobility of regional capacity to disperse the risk associated with overly concentrated production.

‧ Enhance culture publicity to grow with local employees and suppliers through collaboration in a unified corporate culture.

‧ Constantly optimize the process and technology of high-tech products, combine the innovation energy of R&D talents, and re-define the new-generation of “Made in Taiwan” to provide markets with higher value-added products and services.

(9) The potential risk of procurement or sales centralization and countermeasures

Most of our major customers are leading companies at home and abroad, and there is no significant change in the past two years. As we hold diversity material suppliers and cultivate new sources, procurement centralization is not a major risk or concern to us.

(10) Influence and potential risk of the massive transfer or conversion of shares by Directors or dominant shareholders with over 10% of the stakes and countermeasures The combined stakes of Directors or the dominant shareholders with over 10% of the stakes are about 41.2%, and there is no report of massive transfer or conversion of shares.

(11) Influence and risks of management change and countermeasures The management is stable and as the combined stakes of Directors or the dominant shareholders with over 10% of the stakes are about 41.2%, there is no risk of management change.

- 141 -

(12) Litigious or non-litigious events:

i. Major litigious or non-litigious events and administrative remedies A. Litigious events:

Please refer to litigious events listed in the Company’s financial statements for details.

B. Non-litigious events: There was no continuing non-litigious event in the past two years.

C. Administrative remedies: There was no continuing administrative remedy in the past two years.

ii. Major litigious or non-litigious events or administrative remedies of Directors,

president, dominant shareholders with over 10% of the stakes, and affiliates In the previous years and by the date of report publication, there is no report of major litigious or non-litigious events or administrative remedies on the above roles.

(13) Other important risks and countermeasures

i. Risk Management Policies and Procedures The Company has estblished the "Risk Management Guidelines" and was approved by the Board of Directors in December 2020 as the guiding principles for risk management. The Company reported its risk management operations for the year in the same session to facilitate the identification, analysis, evaluation and control of operational risks. The Board of Directors is responsible for establishing and overseeing the risk management structure of the Consolidated Companies. The President is responsible for the development and control of the Consolidated Companies’ risk management policies and reports regularly to the Board of Directors on its operations.

ii. Scope of Risk Management

The main objective is to mitigate the impact of risks on the enterprise, to ensure that the operational risks of the Company and the Consolidated Companies are under the scope of control, to enable the Group's overall operations to focus on business growth and operational efficiency, and to help safeguard shareholders' equity.

Based on the risk events that occurred in the previous year and the opinions of external experts, the Company and the Consolidated Companies deliberate on the issues that may adversely affect the operations of the Company and the Consolidated Companies in the current year at the beginning of the period, and use them as the basis for the overall assessment and risk ranking of operational risks in the new year. Planned risk control items then undergo proposed risk management measures after approval for overall monitoring or mitigation. The monitoring and control tools mentioned above include, but are not limited to, the use of autonomous risk management as a risk control/risk retention, or risk transfer/insurance.

- 142 -

The Company's risk management procedures include: risk identification, risk measurement, risk monitoring, risk reporting and disclosure, and risk response.

iii. Operational Status

A summary of the operations and results for FY 2020 is as follows: A. Asset Risk Management

In addition to insuring tangible assets (e.g., buildings, equipment, inventories, logistics cargo) and intangible assets (e.g., information security, accounts receivable) against risks in accordance with or exceed industry standards, to facilitate sound self-risk management practices, the Company also submits a "To Do List" to the General Administration Office at the beginning of each year to discuss the priorities of the year's critical risk audits and conducts risk audits and training for the Company and its consolidated companies accordingly. During the year, the team completed the following in the area of asset risk management, despite limitations on the team's overseas audits due to the pandemic: Risk audit on the Company’s operations in Taiwan, QTMC (Quanta

Taiwan Manufacturing City), and improvement actions based on the recommendation report from external experts

Infrared inspection of factories in Taiwan Remote education and training at the manufacturing plants in

mainland China

B. Information Security Management The Company has always value the importance of the maintenance of information security. In addition to having information security insurance coverage since 2008, the Company also established the "Information Security Management Policy" and "Information Security Risk Management Framework" in 2009, and initiated plans to obtain ISO27001 certification in 2020 to actively promote the implementation of information security measures. The main operational statuses during the year were as follows: The Information Security Risk Management Committee evaluated the

information security risks, risk impact, assessment and response in the current environment and decided to introduce ISO27001 certification to formalize information security risk management and upgrade the level of information security risk management. Implementation is currently in progress.

Interviews with key personnel in each unit to understand the process and system and analysis of related data and information security gaps. Plans are in place to build corresponding information security systems for sound management.

Information security course is included as a mandatory employee training course, which is conducted yearly. Employees are required to pass a test to strengthen the awareness and knowledge of information security risk management of employees.

In accordance with the information security policy, the Company has implemented information security risk management practices, and set

- 143 -

up special staff to conduct audits and check the reports of deficiencies and improvements.

C. CSR-related Risk Management The CSR task force conducts an annual assessment of labor and ethical risks, evaluating whether the various measures at each plant may jeopardize labor rights and interests and violate accepted ethics standards of the industry, while proposing improvement plans if there are high-risk items identified. The evaluation results and improvement plans are approved by each plant management representative and then submitted to the Board of Directors upon approval from the President.

D. Other Risks Epidemic Prevention and Risk Management for Severe Pneumonia with Novel Pathogens (COVID-19): In response to the impact of the COVID-19 pandemic, which is an issue of importance to industry, government, and academia, the Chairman and President have taken the initiative to raise the level of risk management, accelerate the procurement of epidemic prevention materials, and establish a contingency mechanism since the beginning of the outbreak in January. In order to implement the consolidation of authority with corresponding incident, the Company established a risk management plan in March for Severe Pneumonia with Novel Pathogens (COVID-19) in line with the "Guidelines for Continuous Operation of Enterprises in Response to the Severe Pneumonia with Novel Pathogens (COVID-19) " as set forth by the Central Epidemic Command Center (CECC) of the Centers for Disease Control, Ministry of Health and Welfare, and approved by the Company’s President for implementation. Under this plan, an Epidemic Risk Management Task Force has been established to promote the relevant work. The Task Force has implemented the above risk management practices to control the impact of COVID-19 on the Company's operations and employees' physical and mental health in an effective and timely manner. Specific measures are summarized as follows: a. At the beginning of the year, when the initial outset and development of

the epidemic was still largely unknown, the Company immediately took the initiative to expedite the procurement of relevant epidemic prevention materials, including infrared temperature measuring devices, forehead thermometer guns, alcohol hand sanitizers and alcohol, and other epidemic prevention materials, and completed relevant epidemic prevention measures in February. The Company also set up a mask production line to provide masks to our employees at no cost.

b. In response to the COVID-19 pandemic, the Company held irregular discussion and plan meetings for the implementation of epidemic prevention measures during the early stages of the pandemic, and formulated epidemic prevention plans with response measures corresponding to different levels of the outbreak according to the prevailing epidemic situation.

- 144 -

c. At the beginning of the COVID-19 pandemic, epidemic prevention measures included alcohol-based hand disinfection, body temperature measurements, and mask requirements before entry into the Company’s factories. Furthermore, environmental disinfection, air conditioning system adjustments to increase the amount of fresh air, and strengthening of health education and publicity related to the epidemic were also performed. Visitors entering the Company’s factories were required to register with real-names and fill out the epidemic prevention survey form.

d. When the epidemic situation is deemed severe, the Company shall implement hierarchical zoning controls to reduce the risk of cross-infection. This is achieved through measures such as assigning dedicated personnel from each department to perform cross-zone activities, suspending the use of the Company's public areas (such as restaurants, lobbies, public meeting rooms, gyms, etc.); prohibiting visitors from entering the factory and employees from going out to visit customers, utilizing video conferencing instead of group meetings; sending individual lunch boxes for meals to reduce group contact and maintain social distance to reduce the risk of any cross-infection to ensure and maintain the Company's productivity.

e. The dining area in the employee cafeteria is closed and switched to a system of ordering meals and eating at individual seats, cease operations of public places such as fitness centers to prevent possible risks from group gatherings, and suspend overseas travel for employees. The Company distributes two to three epidemic control advisory letters every week to remind employees to be more vigilant and cooperative with the Company's epidemic prevention policies.

f. The Company distributes "Daily Self-Health Monitoring Report" surveys through its internal systems every day, asking employees to self-evaluate their physical and mental conditions, and to further investigate the possible risks of employees and close contacts, in order to further control and mitigate any possible hazards to the Company as well as its employees. In case of abnormalities, the Company's medical personnel will provide care and perform follow-ups to assure the physical and mental health of employees.

g. Work From Home (WFH) is a contingency plan that addresses the possible demand for remote working requirements arising from necessary epidemic control measures: Strengthen software and hardware related IT equipment and conduct full-scale simulation tests. If deemed necessary, the Company will immediately activate WFH protocols, with specific actions including: ‧ Enhance the communication and environment platform conducive to

Working From Home: Provide employees operational tools that allow for WFH processes and conduct related system operation and business remotely, and provide video conference and file sharing communication system to ensure that employees can still

- 145 -

communicate smoothly when working from home, so as to maintain the same productivity as when they are working normally.

‧ Expand external connection bandwidth: Increase the connection bandwidth to meet the additional demand of large-scale WFH activities that remain connected to the Company’s network.

‧ In addition to publicizing the relevant measures, we also assist our employees in building and making applicable systems environment settings as well as arranging drills and simulations to ensure a smooth response in case of emergency.

h. Other supporting measures for epidemic prevention include: To ensure the flexible use of human resources in the Company, after the approval of the President, the Company can activate on-site work in pre-assigned batches according to the nature of the work, with part of the workforce working remotely from home through network access and the other part working at Company locations. In view of the Company's employee attendance situation, dynamic and flexible adjustments are made to the office and factory security guards' patrol schedule, strengthening the access control of the factory and foreign workers' dormitories, and simulating the dormitory’s “epidemic prevention meal arrangements”.

(14) The management framework and management programs of information security risk.

i. Management framework of information security risk

ii. Management framework and management programs of information security risk We have established an ISMS (Information Security Management System) to manage information security risk. The framework of our internal risk management organization layouts as following: the management information center under general admission office implements information security management; the planning committee of the risk management organization led by the senior vice president of general admission office and the chief of the management information center is formed by members implementing the information security program. The manager in charge of information security management of the management information center is the information security manger under the committee. The organization consists of the team of establishing information security system, the team of implementing information security technology, and the team of information security audit. The information security system establishment team establishes and maintains various information security management systems; the information security technology implementation team builds the information security system including network management and

- 146 -

system management; and the information security audit team performs information security audits in coordination with the audit units, including internal audit and external audit. The information security risk management unit is a subunit of Proprietary Information Security (PIS). It reports information security to the PIS meeting semiannually and review information security policies.

We establish our information security policy according to the ISMS certification standards. We have also established risk management systems for individual information systems and information services. Risk assessment on information security and network risk is performed based on the risk assessment process and risk control is implemented according to the influence level and incidence rate of risk. We implement corresponding management mechanism on high-risk systems based on assessment, establish high availability (HA) high reliability architecture, data backup (transaction records, differential backup, and full back up), and offsite backup server rooms to ensure business continuity. We also set up dedicated lines to send backup data to offsite storage and perform system switch semiannually to ensure the normal operation of the backup mechanism and comply with the system restoration target. We have also bought information security insurance to cover all types of information security risks. We have established processes to handle and address the influence of major information security events for the reference of employees to handle and address information security events. We also set information security as a focus of awareness education. Every year, PIS arranges related courses and awareness education activities to raise the employee’s awareness of information security. We also perform information security risk audits regularly to ensure the effective operation of the information security risk management mechanism.

7. Other Material Information

N.A.

- 147 -

VIII. Special Disclosure 1. Summary of Affiliated Companies

(1) Organization Chart

- 148 -

- 149 -

- 150 -

(2) Summary of Affiliated Companies Unit: NT$ thousand

Name of Affiliated

Company

Date of

Establishment Address

Paid-In

Capital

Principal Activity

or Major Operation

Quanta Storage Inc. (QSI)

02/10/1999 3F., No. 188, Wenhua 2nd Rd., Guishan Dist., Taoyuan City, Taiwan

NT$ 2,783,589

Manufacture and sale of optical storage equipment, and computer storage devices and peripherals.

Quanta Venture Capital Co., Ltd.

12/07/1999 10F., No.76, Bo'ai Rd., Zhongzheng Dist., Taipei City, Taiwan 3333

NT$ 1,000,000

Venture Capital

Quanta Computer Technology Investment Corp.

01/12/2005 NT$ 600,000

Investment Company

Quanta Micro-Systems Inc.

02/20/2006 No. 188, Wenhua 2nd Rd., Guishan Dist., Taoyuan City, Taiwan

NT$ 232,750

Electronic Company

RoyalTek Company Ltd. 12/23/2000 4F., No. 188, Wenhua 2nd Rd., Guishan Dist., Taoyuan City, Taiwan

NT$ 506,077

Design, manufacture, processing, distribute, and sale of satellite guided navigation systems and peripherals, navigated maps and digital maps

Quanta Cloud Technology Inc. (QCTTW)

02/08/2007 9F., No.118, Hougang St., Shilin Dist., Taipei City, Taiwan

NT$ 282,000

Sale of computers and peripherals

Quanta International Limited (QIL)

07/23/1998 PO Box 31119 Grand Pavilion, Hibiscus Way, 802 West Bay Road, Grand Cayman, KY1-1205, Cayman Islands

US$ 934,844

Holding Company

QCJ Co., Ltd. 06/29/2004 ATC Building 5F, 2-1-10 Nankoukita, Suminoe-ku, Osaka City, Japan

JPY 10,000

After-sales service and sale of computers and telecommunication products

QMB Co., Ltd. 08/15/2019 No. 238 Moo 2 Tambon Nongchak Amphoe Banbueng Chonburi, Thailand 20170

THB$ 2,500,000

Manufacture and sale of computers, peripherals and consumer products

Quanta Cloud Technology Singapore Pte. Ltd. (QCTS)

01/01/2020 8 Cross Street #28-01 Manulife Tower, Singapore 048424

US$ 1,000

Sale and after-sales service of computer peripherals

QCE Computer B.V. (QCE)

11/27/1998 Looskade 20, Roermond 6041 LE, Netherlands

US$ 4,918

Sale and after-sales services of computer peripherals

Access International Company (AIC)

11/17/1998 1912 Capital Avenue, Suite 406, Cheyenne, WY 42003, USA

US$ 6,280

Holding Company

Quanta Asia Ltd. (QAL)

06/14/2000 OMC Chambers, Wickhams Cay 1, Road Town, Tortola, British Virgin Islands

US$ 871,586

Investment company and after-sales services

Quanta Capital Management Ltd. (QCML)

04/17/2001 US$ 5,042

Investment Company

Quanta Manufacturing Inc. (QMI)

12/18/1998 45630 Northport Loop East, Fremont, CA 94538, USA

US$ 1,357

Assembly and processing of computers and peripherals

- 151 -

Quanta Service Inc. (QSI-USA)

12/18/1998 US$ 417

After-sales service of computers and peripherals

Quanta Computer USA, Inc. (QCA)

04/23/1991 US$ 1,074


QCH Inc., a Nevada Corp. (QCH)

07/21/1999 100 West Liberty Street, 10th Floor, Reno, NV 89501, USA

US$ 1,000


Quanta Development Ltd. (QDL)


US$ 738,068

Holding Company

Quanta International Technology Ltd. (QIT)

12/12/2000 US$ 4,962

Sale of computers and peripherals, and investment company

Q_Bus International Ltd. (Q_Bus)

09/28/2005 Vistra Corporate Services Centre, Ground Floor NPF Building, Beach Road, Apia, Samoa

US$ 267,424

Holding Company

Quanta Manufacturing Nashville LLC (QMN)

05/16/2003 1621 Heil Quaker Boulevard, LaVergne, TN 37086, USA

US$ 1,350


Quanta Service Nashville LLC (QSN)

06/18/2003 US$ 10


Quanta Computer Nashville LLC (QCN)

06/18/2003 US$ 10


QCH Nashville LLC (QCHN)

06/18/2003 US$ 420


QCG Computer GmbH (QCG)

01/07/2004 Indelandstrasse 2+4, 52249 Eschweiler, Germany

EUR 9,670


Tech Chain Ltd. (TCL)


US$ 233,900

Holding Company

Exmore Services Holding Ltd. (EXM)

01/18/2001 US$ 200

Holding Company

Quanta Development (Hong Kong) Ltd. (QDLHK)

11/07/2007 1501 Capital Centre, 151 Gloucester Road, Wan Chai, HK

US$ 825,727

Sale of computers and peripherals and an investment company

Tech Chain (Hong Kong) Ltd. (TCLHK)

11/07/2007 US$ 244,212

Investment Company

Exmore Services Holding (Hong Kong) Ltd. (EXMHK)

11/07/2007 US$ 482

Investment Company

THINKTECH COMÉRCIO DE INFORMÁTICA LTDA

06/26/2003 Rua José Paulino, 2236-conjunto 44; ZIP CODE: 13.023-102; Campinas/ São Paulo; Brazil

BRL$ 114,097


Quanta Cloud Technology USA LLC (QCT-USA)

03/18/2011 1010 Rincon Circle, San Jose, CA 95131, USA

US$ 12,100

Sale of computer Peripherals

QCT Inc. 03/16/2012 PO Box 31119 Grand Pavilion, Hibiscus Way, 802 West Bay

US$ 100

Investment Company

- 152 -

Road, Grand Cayman, KY1-1205, Cayman Islands

QCT Korea Inc. 11/14/2012 10F, Kyobo Securities Bidg. 97, Uisadang-daero, Yeongdeungpo-gu, Seoul, 07327, South Korea

KRW 100,000

Sale of computers and Peripherals

Quanta Cloud Technology Germany GmbH (QCTG)

08/09/2016 Hamborner Str. 55, 40472 Düsseldorf, Germany

EUR 4,000

Sale of computer Peripherals

Tech-Front (Shanghai) Computer Ltd.

12/07/2000 No. 2, Alley 58, Sanzhuang Road, Songjiang Export Processing Zone, Shanghai City, China

US$ 120,050

Manufacture and sale of computers and peripherals

Tech-Com (Shanghai) Computer Ltd.

12/07/2000 No. 68, Sanzhuang Road, Songjiang Export Processing Zone, Shanghai City, China

US$ 128,100


Tech-Wave (Shanghai) LogisticsCo., Ltd.

04/22/2006 No. 9, Alley 58, Sanzhuang Road, Songjiang Export Processing Zone, Shanghai City, China

US$ 9,500

Storage service

Tech-Lead (Shanghai) Computer Ltd.

12/21/2010 Building F, No. 68, Rongjiang Road, Songjiang Export Processing Zone, Shanghai City, China

US$ 8,003

After-sales service of computers

Tech-Giant (Shanghai) Computer Ltd.

12/21/2010 Building A,B & C, No. 68, Rongjiang Road, Songjiang Export Processing Zone, Shanghai City, China

US$ 9,903


Tech-Trend (Shanghai) Computer Ltd.

12/21/2010 No.1-1, Alley 6, Lianyang Road, Songjiang District, Shanghai City, China

US$ 22,340

Sale and after-sales service of computers and peripherals

Tech-Full Computer(Changshu) Co., Ltd.

06/15/2006 No. 8, Jinzhou Road, High-Tech Industrial Park, Changshu Economic Development Zone, Changshu City, Jiangsu Province, China

US$ 269,980

Manufacture and sale of computers, mobile communication, storage device, peripherals and accessories

Zhan Yun (Shanghai) Electronics Co., Ltd

04/05/2002 No. 1, Alley 8, Rongjiang Road, Songjiang Export Processing Zone, Shanghai City, China

US$ 83,000

Manufacture and sale of computers and components of peripherals

Kenseisha Shanghai P.M.P. Co., Ltd.

05/17/2007 No. 3111, West Huancheng Road, Minhang Export Zone, Shanghai City, China

US$ 18,000

Manufacture and sale of precision machinery, peripherals and metallic molds

Tech-Front(Chongqing) Computer Co., Ltd

04/26/2010 No. 18, Zongbao Road, Shapingba District, Chongqing City, China

US$ 98,000

Processing, manufacture and sale of computers

Tech-Wave(Chongqing) Logistics Co., Ltd.

07/19/2011 US$ 5,000

Storage Service

Cloud-Tech (Chongqing) Technology Co., Ltd.

02/25/2014 Buliding 8, No. 88, ZengGuang Road, Shapingba District, Chongqing City, China

US$ 1,000

Sale of servers and switches

Tech-Com (Chongqing) Computer Co., Ltd.

05/23/2017 No. 18-9 & 10, Zongbao Road, Shapingba District, Chongqing City, China

US$ 50,000

Manufacture and sale of computers, mobile communication, storage device, peripherals and accessories

QCT(Beijing) Co., Ltd

11/18/2020 2# RunCheng Center, No.12 Dong Da Qiao Road, ChaoYang District, Beijing, China

RMB 1,000

Software technology development, consultancy, service and the trading of

- 153 -

server and switch.

Quanta Cloud Technology Japan Inc. (QCTJ)

10/26/2011 Shibadaimon Makita Bldg. 3F, 2-5-8, Shibadaimon, Minato-ku, Tokyo City, Japan

JPY 10,000

Sale of computer peripherals

Fly Dragon Int’l Ltd. 08/19/2005 Vistra Corporate Services Centre, Albert Lake Drive, The Valley, Anguilla, British West Indies

US$ 85,200

Investment company and trading company

Dragon Grand Group Ltd.

03/20/2002 Vistra Corporate Services Centre, Ground Floor NPF Building, Beach Road, Apia, Samoa

US$ 8,200

Investment company and trading company

Kenseisha (Changshu) P.M.P Co., Ltd.

01/12/2007 No. 15, Jinzhou Road, High-Tech industrial park Changshu Economic Development Zone, Changshu City, Jiangsu Province, China

US$ 85,000

Manufacture and sale of machine cases, molds and tools

Dragontech Metallic Industry Co., Ltd.

08/01/2002 No. 5-6, Alley 8, Sanzhuang Road, SongJiang Export Processing Zone, Shanghai City, China

US$ 7,200

Manufacture and sale of computers and components of peripherals

Royaltek International Eenterprises Ltd. (RTKI)

04/29/2010 Datec House,Ground Floor, Thonas Trood Street, Fugalei,Apia, Samoa

US$ 1,565

Investment Company

Royaltek Trading (Changshu) Co., Ltd.

08/27/2010 No.9, Jinzhou Road, High-Tech Industrial Park, Changshu Economic Development Zone, Changshu City, Jiangsu Province, China

US$ 1,526

Import and export business and wholesale of electronic products

Quanta Storage Investment Inc.

08/17/2004 2F, No. 188, Wenhua 2nd Rd., Guishan Dist., Taoyuan City, Taiwan

NT$ 28,000

Investment Company

Techman Robot Inc. 09/18/2005 4F, No. 188, Wenhua 2nd Rd., Guishan Dist., Taoyuan City, Taiwan

NT$ 800,000

Manufacture and sale of industrial collaborative robots

Techman Inc. 08/10/2018 1F, No. 188, Wenhua 2nd Rd., Guishan Dist., Taoyuan City, Taiwan

NT$ 500,000

Factory automation planning, installation and implementation

Quanta Storage International Ltd. (QSI(Cayman))

07/10/2001 Huntlaw Building, P.O. Box 2804, George Town, Grand Cayman, Cayman Island

NT$ 82,820

Investment Company

Quanta Storage (BVI) Ltd. (QSL(BVI))

07/23/2001 P.O. Box 3152, Road Town, Tortola, British Virgin Islands

US$ 58,520

Investment Company

E-Forward Technology Ltd. (E-Forward)

08/08/2000 Vistra Corporate Services Centre, Ground Floor NPF Building, Beach Road, Apia Samoa

US$ 6,000

Manufacture and sale of computer storage devices and components of peripherals

Quanta Storage Asia Ltd.

05/07/2003 US$ 6,000

Sale and after-sales service of computer storage devices and components of peripherals

Quanta Storage Holding (Hong Kong) Ltd. (QHH)


US$ 37,699

Investment Company

- 154 -

(3) Shareholders in Common of the Company and Its Subsidiaries with Deemed Control and

Subordination: NA

(4) Principle Activities of Affiliated companies: Type of

Business Name of Affiliated Company Principle Activities

Investment Quanta Venture Capital Co., Ltd. Long-term investment palnning and seek opportunities for strategic partnership

Quanta Computer Technology Investment Corp. Strategic Investment

Quanta Capital Management Ltd. Holding Company

QCT Inc.

Quanta Asia Ltd.

Quanta International Technology Ltd.

Quanta International Ltd

QCE Company B.V.

Access International Company

Quanta Development Ltd.

Quanta Development (Hong Kong) Ltd.

Q_Bus International Ltd.

Tech Chain Ltd.

Exmore Services Holding Ltd.

Tech Chain (Hong Kong) Ltd.

Exmore Services Holding (Hong Kong) Ltd.

Techman Electronics (Hong Kong) Ltd.

11/07/2007 US$ 27,787

Investment Company

Quanta Storage (Shanghai), Ltd.

11/29/2001 No. 6, Alley 66, Sanzhuang Rd., Songjiang Export Processing Zone, Shanghai City, China

US$ 30,000


Techman Electronics (Changshu), Ltd.

01/21/2009 No.66, Dalian Road, High-Tech Industrial Park, Changshu Economic Development Zone, Changshu City, Jiangsu Province, China

US$ 18,000


Techman Robot (Shanghai), Ltd (TRS).

04/29/2019 Room 402-1, Building 6, No.1158, ZhongXin Road, Jiuting Town, Songjiang District, Shanghai, China

US$ 4,000

Sale and after-sales service sale of industrial collaborative robots and components

Techman Electronics (Thailand) Co., Ltd.

06/02/2017 40/10-12 Moo 5, Rojana Industrial Park, Tambol U-Thai, Amphur U-Thai, Ayudhaya Province 13210

THB$ 1,100,000


Techman Robot (Hong Kong), Ltd. (TRH)


US$ 4,000

Investment Company

TM SMT SDN. BHD. (JVM)

05/13/2019 1-10-7 SUNTECH@PENANG CYBERCITY LINTANG MAYANG PASIR 3 11950 BAYAN BARU PULAU PINANG MALAYSIA

MYR$ 4,000

Sale of computer storage devices and components of peripherals

TM SMT (Thailand) Co. Ltd.

08/10/2020 No,196, Mu 10,304 Industrial Pank, Tha Tum Sub-district, Si Maha Pho District, Prachin Buri Province

THB$ 5,000

Sale of computer storage devices and components of peripherals

- 155 -

Type of Business

Name of Affiliated Company Principle Activities

FDDT

FGT

Quanta Storage Investment Inc. Investment company of Quanta Storage Inc.

Quanta Storage International Ltd. Investment company of Quanta Storage Inc. - Indirect investment in China and Asia Quanta Storage (BVI) Ltd.

Quanta Storage Holding (Hong Kong) Ltd.


Techman Robot (Hong Kong) Ltd.

Royaltek International Enterprises Ltd. Investment company of RTK - Indirect investment in China

Manufacturing for electronic products

Quanta Storage Inc. R&D and manufacturing of optical products

Quanta Manufacturing Inc. Overseas assembly site

Quanta Manufacturing Nashville LLC

QCG Computer GmbH

Quanta Micro-Systems Inc. Design and manufacture of communication products

RoyalTek Company Ltd. Design and manufacture of wireless communication products

Zhan Yun (Shanghai) Electronics Co., Ltd. Manufacturing of metallilc products and molds


Tech-Front (Shanghai) Computer Inc. Manufacturing and production of electronic prodcuts



Tech-Full Computer (Changshu) Co., Ltd.

Tech-Front (Chongqing) Computer Co., Ltd.

Kenseisha Changshu P.M.P. Co., Ltd.

Dragon Metallic Industry Co., Ltd. Tech-Com (Chongqing) Computer Ltd.

QMB Co., Ltd.

E-Forward Technology Ltd. Indirect investment company for Quanta Storage Inc. - Manufacturing and prodction of electronic products Quanta Storage (Shanghai), Ltd.

Techman Electronics (Changshu), Ltd.

Techman Robot Inc.

Techman Inc.


TM SMT (Thailand) Co. Ltd.

Technical services for electronic products

QCJ Co. Ltd. To provide nearby after-sales services and repair for customers Quanta Service Inc.

Quanta Service Nashville LLC

Quanta Computer USA, Inc.

Quanta Computer Nashville LLC

Tech-Trend (Shanghai) Computer Ltd.


QCT(Beijing) Co., Ltd.

Trade and sales of electrlnoc products

QCH Inc., a Nevada Corp. Sales of the Company’s products in U.S.

QCH Nashville LLC Quanta Cloud Technology USA LLC QCT Korea Inc. Wholesale of electronic products, perripherals, and

communication equipments Quanta Cloud Technology Inc.



Quanta Cloud Technology Japan Inc.

Quanta Cloud Technology Germany GmbH

- 156 -

Type of Business

Name of Affiliated Company Principle Activities

Quanta Cloud Technology Singapore Pte. Ltd.

Quanta Storage Asia Ltd. Investment Company of Quanta Storage Inc. - Trade and sales of electronic products Techman Robot (Shanghai), Ltd.

TM SMT SDN. BHD.

TM SMT (Thailand) Co., Ltd.

Royaltek Trading (Changshu) Co., Ltd. Investment company of RTK - Wholesales, export and import of electronic

products

Logistics Tech-Wave (Shanghai) Logistics Co., Ltd. Logistics management and related businesses Tech-Wave (Chongqing) Logistics Co., Ltd.

- 157 -

(5) Directors and Presidents for Affiliated Companies:

Name of Affiliates Title Name or Representative

Share holding

(thousand shares)

Shares %

Quanta Storage Inc. Chairman Director

Shi-Chi Ho

Quanta Computer Inc. Representatives:

Alan Tsai C.T. Huang Elton Yang

1,143

82,882

- - -

0.41%

29.78%

- - -

Independent Director Kuan-Shen Wang - -

Yeou-Jyh Tsai 60 0.02%

Yen-Hau Chen - -

President Chia-Feng Chang 744 0.27%


Chairman

Quanta Computer Inc. Representative:

Barry Lam

100,000

-

100.00%

-


Chairman


Barry Lam

60,000

-

100.00%

-

Quanta Micro-Systems Inc.

Chairman


C.C. Leung

17,500

-

75.19%

-

Supervisor

Quanta Computer Technology Investment Corp. Representive:

Mandy Tai

5,775

-

24.81%

- RoyalTek Company Ltd.

Chairman Jin-Hau Su 46 0.09%

Director


C.C. Leung Elton Yang Sophie Chen

18,604

- - -

36.76%

- - -

Independent Director Li-Wei Shen - - Yu Hsin Lee - -

B.K. Chen - -

Quanta Cloud Technology Inc.

Chairman Director Director & President


Barry Lam C.C. Leung Mike Yang

28,200

- - -

100.00%

- - -

Supervisor


Mandy Tai

-

-

-

-

Quanta International Limited (QIL)

Director


Barry Lam

93,484

-

100.00%

-

QCJ Co., Ltd.


200

100.00%

Director

Michael Wu C.C. Leung

- -

- -

Supervisor


Angela Tsai

200

-

100.00%

-

QMB Co., Ltd. Quanta Computer Inc. (note) 100.00%

- 158 -


Share holding

(thousand shares)

Shares %

Director

Representatives: C.C. Leung C.T. Huang Elton Yang

- - -

- - -

Quanta Cloud Technology Singapore Pte. Ltd. (QCTS)

Director


C.C. Leung Mike Yang Choy Yew Kay

1,000

- - -

100.00%

- - -

QCE Computer B.V. (QCE)

Director

QIL Representative:

Elton Yang

4,918

-

100.00%

-

Access International Company (AIC)


QIL Representatives:

Barry Lam C.C. Leung Alan Pak-Lin Lam

6,280

- - -

100.00%

- - -

Quanta Asia Ltd. (QAL)

Director

QIL Representative:

Barry Lam

871,586

-

100.00%

-

Quanta Capital Management Ltd. (QCML)

Director


Barry Lam C.C. Leung

5,042

- -

100.00%

- -

Quanta Manufacturing Inc. (QMI)


AIC Representatives:

C.C. Leung Barry Lam Alan Pak-Lin Lam

1,357

- - -

100.00%

- - -

Quanta Service Inc. (QSI-USA)



C.C. Leung Barry Lam Alan Pak-Lin Lam

417

- - -

100.00%

- - -

Quanta Computer USA, Inc. (QCA)



Barry Lam C.C. Leung Alan Pak-Lin Lam

10,737

- - -

100.00%

- - -

QCH Inc., a Nevada Corp. (QCH)



Barry Lam Alan Pak-Lin Lam C.C. Leung

1,000

- - -

100.00%

- - -

Quanta Development Ltd. (QDL)

Director

QAL Representative:

C.C. Leung

514,289

-

100.00%

-

Quanta International Technology Ltd. (QIT)

Director

QAL Representative:

C.C. Leung

4,962

-

100.00%

-

Q_Bus International Ltd. (Q_Bus)

Director

QAL Representative:

C.C. Leung

267,424

-

100.00%

-

- 159 -


Share holding

(thousand shares)

Shares %

Quanta Manufacturing Nashville LLC (QMN)

Chairman President

QMI Representatives:

C.C. Leung Mike Dunne

(note)

- -

100.00%

- -

Quanta Service Nashville LLC (QSN)

Chairman President

QSI-USA Representatives:


(note)

- -

100.00%

- -

Quanta Computer Nashville LLC (QCN)

Chairman President

QCA Representatives:


(note)

- -

100.00%

- -

QCH Nashville LLC (QCHN)

Chairman President

QCH Representatives:


(note)

- -

100.00%

- -

QCG Computer GmbH (QCG)

Managing Director

QIT Representatives:

C.C. Leung Mike Yang

(note)

- -

100.00%

- -

Tech Chain Ltd.

Director

Q_Bus Representative:

C.C. Leung

233,900

-

100.00%

-

Exmore Services Holding Ltd. (EXM)

Director

Q_Bus Representative:

C.C. Leung

190

-

95.00%

-

Quanta Development (Hong Kong) Ltd. (QDLHK)

Director

QDL Representative:

C.C. Leung

85,572,689

-

100.00%

-

Tech Chain (Hong Kong) Ltd. (TCLHK)

Director

Tech Chain Ltd. Representative:

C.C. Leung

24,421,201

-

100.00%

-

Exmore Services Holding (Hong Kong) Ltd. (EXMHK)

Director

EXM Representative:

C.C. Leung

48,156

-

100.00%

-


Director

QCE Representatives:

Maria Fernanda Pécora Gedeon

19,218

- -

16.84%

- -

Quanta Cloud Technology USA LLC (QCT-USA)

Director


Alan Pak-Lin Lam Mike Yang

(note)

- -

100.00%

- -

QCT Inc. Director

QIL Representative:

Barry Lam

(note)

-

100.00%

-

QCT Korea Inc. (QCTK)

Director

QCT Inc. Representative:

Mike Yang

(note)

-

100.00%

-

- 160 -


Share holding

(thousand shares)

Shares %

Quanta Cloud Technology Germany GmbH (QCTG)

Managing Director

Quanta Cloud Technology Inc. Representatives:

C.C. Leung Mike Yang

(note)

- -

100.00%

- -

Tech-Front (Shanghai) Computer Inc.

Chairman Director & President Director

QDLHK Representatives:

C.T. Huang Elton Yang Mandy Tai

(note)

- - -

100.00%

- - -

Supervisor

QDLHK Representative:

Tim Kuo

(note)

-

100.00%

-





(note)

- - -

100.00%

- - -

Supervisor


Tim Kuo

(note)

-

100.00%

-

Tech-Wave (Shanghai) Logistics Co., Ltd.




(note)

- - -

100.00%

- - -

Supervisor


Tim Kuo

(note)

-

100.00%

-





(note)

- - -

100.00%

- - -

Supervisor


Tim Kuo

(note)

-

100.00%

-





(note)

- - -

100.00%

- - -

Supervisor


Tim Kuo

(note)

-

100.00%

- Tech-Trend (Shanghai) Computer Ltd.




(note)

- - -

100.00%

- - -

Supervisor


Tim Kuo

(note)

-

100.00%

-

- 161 -


Share holding

(thousand shares)

Shares %

Tech-Full Computer (Changshu) Co., Ltd.




(note)

- - -

100.00%

- - -

Supervisor


Angela Tsai

(note)

-

100.00%

-

Zhan Yun (Shanghai) Electronics Co., Ltd.


TCLHK Representatives:


(note)

- - -

100.00%

- - -

Supervisor

TCLHK Representative:

Tim Kuo

(note)

-

100.00%

-


Chairman & President Director


C.S. Yang Elton Yang Mandy Tai

(note)

- - -

100.00%

- - -

Supervisor


Tim Kuo

(note)

-

100.00%

-

Tech-Front (Chongqing) Computer Co., Ltd.




(note)

- - -

100.00%

- - -

Supervisor


Tim Kuo

(note)

-

100.00%

-

Tech-Wave (Chongqing) Logistics Co., Ltd.




(note)

- - -

100.00%

- - -

Supervisor


Tim Kuo

(note)

-

100.00%

-





(note)

- - -

100.00%

- - -

Supervisor


Tim Kuo

(note)

-

100.00%

-

Tech-Com (Chongqing) Computer Ltd.




(note)

- - -

100.00%

- - -

- 162 -


Share holding

(thousand shares)

Shares %

Supervisor


Tim Kuo

(note)

-

100.00%

-

QCT (Beijing) Co., Ltd. Chairman Director & President Director



(note)

- - -

100.00%

- - -

Supervisor


Tim Kuo

(note)

-

100.00%

-

Quanta Cloud Technology Japan Inc. (QCTJ)

Director

Quanta Micro-Systems Inc. Representative:

Mike Yang

(note)

-

100.00%

-

Fly Dragon Int'l Ltd. Director


C.S. Yang Elton Yang

85,200

- -

100.00%

- -

Dragon Grand Group Ltd.

Director


C.S. Yang Elton Yang

8,200

- -

100.00%

- -

Kenseisha Changshu P.M.P. Co., Ltd.

Chairman Director

Fly Dragon Int'l Ltd. Representatives:


(note)

- - -

100.00%

- - -

Supervisor

Fly Dragon Int'l Ltd. Representative:

Tim Kuo

(note)

-

100.00%

-

Dragon Metallic Industry Co., Ltd.

Chairman Director

Dragon Grand Group Ltd. Representatives:


(note)

- - -

100.00%

- - -

Supervisor

Dragon Grand Group Ltd. Representative:

Tim Kuo

(note)

-

100.00%

-

Royaltek International Enterprises Ltd. (RTKI)

Chairman

RTKI Representative:

Jin-Hau Su

(note)

-

100.00%

-

RoyalTek Trading (Changshu) Co., Ltd.

Chairman Director

RTKI Representatives:

Jin-Hau Su Jen-Te Tseng Tim Kuo

(note)

- - -

100.00%

- - -

Supervisor

RTKI Representative:

Kai-Lun Huang

(note)

-

100.00%

-

Quanta Storage Investment Inc. (QSII)

Chairman

Quanta Storage Inc. Representative:

Shi-Chi Ho

2,800

-

100.00%

-

- 163 -


Share holding

(thousand shares)

Shares %

Techman Robot Inc. Chairman Director

Quanta Storage Inc. Representatives:

Shi-Chi Ho Chia-Feng Chang Shang-Hao Chen Shih-Jung Huang Chun-Hui Chang

71,957

- - - - -

89.95% - 3 - - - -

Supervisor Chih-Jen, Lee Mei-Chuan, Chen

88 20

0.11% 0.03%

Techman Inc. Chairman


Shi-Chi Ho

50,000

-

100.00%

-

Quanta Storage International Ltd. (QSI(Cayman))

Chairman


Shi-Chi Ho

(note)

-

100.00%

-

Quanta Storage (BVI) Ltd. (QSL(BVI))

Chairman

QSI (Cayman) Representative:

Shi-Chi Ho

(note)

-

100.00%

-

E-Forward Technology Ltd. (E-Forward)

Chairman

QSI (Cayman) Representative:

Shi-Chi Ho

(note)

-

100.00%

-

Quanta Storage Asia Ltd.

Director

E-Forward Representative:

Shi-Chi Ho

(note)

-

100.00%

-

Quanta Storage Holding (Hong Kong) Ltd. (QHH)

Director

QSL(BVI) Representative:

Shi-Chi Ho

(note)

-

100.00%

-


Director

QSL(BVI) Representative:

Shang-Hao Chen

(note)

-

100.00%

-

Quanta Storage (Shanghai), Ltd.

Chairman Director

QHH Representative:

C.T. Huang Shi-Chi Ho Chia-Feng Chang

(note)

- - -

100.00%

- - -

Techman Electronics (Changshu) Ltd.

Chairman Director

Techman Electronics (Hong Kong) Ltd. Representative:

Shi-Chi Ho Chia-Feng Chang Shang-Hao Chen

(note)

- - -

100.00%

- - -

Techman Robot (Shanghai), Ltd.

Director

TRI Representatives:

Shi-Chi Ho Chia-Feng Chang Shang-Hao Chen

(note)

- - -

100.00%

- - -

Supervisor

TRI Representatives:

Chih-Jen, Lee

(note)

-

100.00%

-

- 164 -


Share holding

(thousand shares)

Shares %


Director


Shi-Chi Ho Chia-Feng Chang Chih-Jen Lee

(note)

- - -

100.00%

- - -

Techman Robot (Hong Kong), Ltd.

Director

TRI Representative:

Shi-Chi Ho

(note)

-

100.00%

-

TM SMT SDN. BHD. (JVM)

Director


Chia-Feng Chang Chih-Jen, Lee

(note)

- -

51.00%

- -

TM SMT (Thailand) Co., Ltd.

Director

JVM Representatives:

Chia-Feng Chang Chih-Jen, Lee

(note)

- -

51.00%

- -

Note: the company is a limited company

- 165 -

(6) Operational Highlights of Affiliates (As of the end of FY2020): Unit: NT$ thousands

Name of Affiliates Capital Stock Total Assets Total Liabilities Net Worth Net Revenue Income (Loss)

From Operation Net Income

(Loss) Basic Earnings

(Loss) Per Share

Quanta Storage Inc. & Subsidiaries

2,783,589 11,815,964 4,432,962 7,383,002 10,476,353 1,032,266 114,339 0.41


1,000,000 840,124 221 839,903 0 (402) (29,845) (0.3)


600,000 661,418 598 660,820 0 -148 8,016 0.13

Quanta Micro-Systems Inc. & Subsidiaries

232,750 2,030,646 1,536,196 494,450 6,511,556 47,285 23,395 1.01

RoyalTek Company Ltd. & Subsidiaries

506,077 1,792,534 277,576 1,514,958 1,058,963 (25,497) 17,877 0.35

Quanta Cloud Technology Inc. & Subsidiaries

282,000 588,542 644,390 (55,848) 731,168 (27,910) (27,499) (0.98)

Quanta International Ltd. & Subsidiaries

29,146,678 552,455,934 516,462,816 35,993,118 1,413,176,649 2,612,658 2,848,151 -

QCJ Co. Ltd. 3,115 2,661 96 2,565 4,285 51 17 -

QMB Co., Ltd. 2,470,289 9,951,040 7,598,064 2,352,976 8,368,985 149,278 93,854 -

Quanta Cloud Technology Singapore Pte. Ltd.

30,130 20,013 11 20,002 0 (8,893) (8,459) -

THINKTECH COMERCIO DE INFORMATICA LTDA

916,908 3,456 104,876 (101,420) 1,606 (6,820) (34,613) -

- 166 -

2. Status of Private Placement Securities: The Company has not issued private placement securities in FY2020 and as of the date of this report's publication

3. Status of Shares Acquired or Disposed by Subsidiaries Name of Subsidiary

Paid-in Capital

Source of Funding

Percentage owned by the Company

Transaction Date (note 1)

Shares/ Amount Acquired

Shares/ Amount Disposed

Investment Income (Loss)

Balance of Shares/Amount (note 2)

Balance of Pledged Shares

Balance of Guarantee Provided by the Company

Balance of Financing Provided by the Company

RoyalTek Company Ltd.

506,077,000 Shares Exchange

36.76% - - - - 8,109,000 shares $656,009,000

NA - -

Note 1: During FY2006, Quanta Computer acquired 37.35% of RoyalTek Company Inc. through strategic alliance. As a result, RoyalTek received Quanta Computer’s common shares issued through capital increase as the exchange of shares.

Note 2: The amount refers to actual amount acquired or disposed.

4. Other Required Supplementary Notes: NA 5. Events with Material Impacts on Equity or Stock Price

There’s no event in FY2020 and as of the date of this report’s publication that had material impact on shareholders’ right or stock price as stated in item 3 paragraph 2 of Article 36 of SEC.

Quanta Computer Inc. Annual Report 2020

Documents

Transcript of Quanta Computer Inc. Annual Report 2020